Top trading houses in race to open liquor factories

Sat, Dec 15, 2012 12:00 AM on Others, Others,

KATHMANDU, DEC 15 -

The country’s top business houses and established players in the liquor industry are racing to acquire new licences to set up alcohol factories.

After the Cabinet scrapped an 11-year-old ban on setting up new liquor factories three months ago, the government has received 75 applications for liquor licences. The government has awarded permits to set up liquor factories to the first batch of 12 companies or individuals.

Among those receiving licences are new players and established names in the liquor industry including the Shah family of Jawalakhel Distillery. Its chairman Bijaya Kumar Shah has obtained a licence in his own name to establish a liquor factory in Parsa. Likewise, his son Raj Bahadur Shah has acquired a licence to set up a beer factory.

According to the Department of Industry (DoI), the government will issue another 12 licences in the second phase. DoI sources said business houses including the Chaudhary Group are in the race to get licenses in the second batch.

According to the DoI, the proposed capital of the companies applying to open liquor factories is in the range of Rs 50 million to Rs 2 billion. “However, the documents they have submitted are yet to be studied,” said Dhruba Lal Rajbanshi, director general of the department. “The applications will be studied by the Industrial Promotion Board, and it will give the go-ahead to the companies fulfilling the standards set by the DoI.”

As per the DoI’s criteria, investors cannot establish liquor factories within a 500 m radius of religious or cultural sites, educational or health institutions, national parks and other sites determined by the government. Similarly, the successful applicants are required to implement their projects on a fast track basis.

In 2001, the government had stopped issuing new licenses to open liquor factories besides forbidding the existing factories to increase their production capacity. The government also began maintaining a close watch on homemade alcohol. It withdrew the ban on new distilleries some three months ago. The move followed concerns over rising imports and proliferation of foreign products in the market, and the Cabinet’s decision to issue permits to new investors to make the industry more systematic and organised.

There are 15 big and medium-sized liquor factories registered at the DoI. Among them, 10 are in operation. As per the Nepal Liquor Manufacturers’ Association (NELMA), the country imports liquor products worth Rs 4 billion annually while domestic output is worth Rs 11.70 billion.

Source: The Kathmandu Post