Once supreme JCF fighting for life
KATHMANDU, MAY 14 -
Janakpur Cigarette Factory (JCF), which once reigned over Nepal’s cigarette market as a giant monopoly, is now battling for life. The bankrupt state-owned factory has been closed for a year, and depends on the government for money to pay its employees.
According to the Finance Ministry, the factory’s net worth is negative by Rs 705.5 million, and its cumulative loss reached Rs 800 million as of fiscal 2009-10. JCF’s situation has deteriorated to such an extent that it could not resume operations even after a cash injection of Rs 722 million it received from the sale of its prime real estate at New Baneshwor, Kathmandu. The aged cigarette factory has planned to seek help from Russia which built the factory as a gift to Nepal way back in 1964. The National Planning Commission (NPC) and the Finance Ministry have not responded to the Industry Ministry’s proposal to ask the Russians to rescue their legacy.
Industry Ministry officials said that the proposal was sent to the NPC for its approval a month ago after the Russian ambassador indicated that they would be willing to provide fresh aid to get the factory back on its feet. “We are yet to receive any answer from the NPC to our proposal to revitalize JCF,” said Yam Kumari Khatiwada, Industry Ministry spokesperson. The proposal has talked about a comprehensive reform plan for the factory which would cost Rs 2.24 billion.
Russia is expected to provide Rs 480 million in grants for machinery, infrastructure and repair, while the government will have to put it Rs 1.76 billion to pay for the voluntary retirement scheme (VRS), operation cost and provident fund for the employees.
As per the plan, the VRS will require Rs 1 billion, operation cost will come to Rs 520 million and the provident fund will require Rs 240. JCF expects 550 of its 833 employees to opt for the VRS scheme.
The factory will hire 70 new employees. Khatiwada added that 400 JCF employees had come to the ministry and urged it to implement the VRS. “We have not been able to make any decision in this regard as we have not heard from the NPC,” she said. NPC vice-chairman Deependra Bahadur Kshetri admitted that there had been no discussion on the proposal. “I myself am not so informed about the latest status of the proposal,” he said.
Industry Ministry officials are optimistic about getting Russian support as per the envoy’s assurance. “We have been failing to inform the Russian side due to our own indecision,” she said.
The proposal has stated that implementation of the reform plan will yield an estimated benefit of Rs 3.54 billion against its cost of Rs 2.24 billion.
Source: The Kathmandu Post
