The committee´s meeting held on Friday also asked the ministry to coordinate with the Ministry of Finance (MoF) and the Ministry of Labor and Transport Management (MoLTM) while preparing the plan.[break]
Bhrikuti Paper and Pulp, an erstwhile state-owned enterprise which was sold to Golchha Organization for Rs 170 million in 1992, suspended its operation in February last year and has not paid its around 350-strong workforce since then.
The factory management has cited accumulation of big chunk of losses, triggered by frequent power cuts, shortage of raw material and discriminating tax policy, as the reason behind the closure.
“The factory that needs electricity supply round the clock had to face power cuts of up to 14 hours per day,” Rajendra Kabra, a board member of Bhrikuti Paper, told the committee meeting. Though the factory was generating 3MW of electricity on its own, this, Kabra said, was not enough and had to rely on expensive diesel-powered generator to generate power.
“Then there was hike in price of rice husk, which fuels boilers and now costs around Rs 5-6 per kg from less than a rupee a year years ago. And we also faced short supply of straw, an important raw material used in manufacturing of paper which is now increasingly being used by farmers themselves,” he said.
These problems were compounded by the government´s discriminatory tax policy of exempting imported text books from import duty and value added tax (VAT), while subjecting books made of paper manufactured by the factory to VAT and factory´s imports to customs duty, Kabra said.
“A combination of these problems raised our operating cost, leaving us without adequate working capital to run the factory,” Kabra said. Following this, the factory management last May asked the labor department to grant it permission to cut down its workforce to limit losses, which, however, did not get the government approval.
“It is unfortunate that Nepal still does not have pro-industrialization policies,” Industry Minister Anil Kumar Jha told the meeting. “If the situation continues, all the industries in Nepal will have to shut down one day and the country will have to turn into a net importer.”
It is unfortunate that the company, which raised its annual production to 78 tons from 13 tons post privatization, has not been able to run its machines. It is also unfortunate that the factory´s pulp, which had carved a niche for itself in Japan, has been unable to reach the market.
But leaders like Bishnu Prasad Rimal of CPN (UML) expressed doubts that problems cited by the management were the only reasons that pushed the factory toward collapse.
“The problem of power cuts is faced by all the factories in Nepal and is not subject to Bhrikuti Paper alone,” he told the parliamentary committee meeting. Regarding short supply of raw material, studies have shown other plants found in Nepal are also best for making paper, he said, pressing the management to give the “real reason” for shutting down the factory.
“Is it because the company was more interested in the land of Bhrikuti Paper than the factory while purchasing it in 1992?” he questioned.
He was referring to the attempts made by the factory management to sell 60 bighas of land plots “to raise working capital”. However, the finance ministry had rejected its proposal citing the motive behind privatization of the factory was to keep it operational and generate employment opportunities.
Friday´s meeting also asked the finance ministry to submit the Memorandum of Understanding signed by the government and Golchha Organization during the time of privatization.
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