The cooperative has already submitted a business plan to the Ministry of Finance (MoF) in this regard, and according to ministry sources Finance Minister Barsha Man Pun has responded positively to the request.[break]
“The government is keen on resuming operation of most of the closed labor intensive state-owned enterprises as they provide employment to a big pool of workers,” the source told Republica. “We hope the business plan would soon be tabled at the Privatization Committee under MoF for discussion.”
Birgunj Sugar Factory was scrapped around nine years ago after it started making losses due to problems related to over-staffing and continuous shortage of raw materials, mainly sugarcane. The government then decided to liquidate the company but due to political pressure it could not do so.
Then in March 2009, the then finance minister Babu Ram Bhattarai, who is now the prime minister, made an about turn on the government´s decision by publicly declaring his wish to see the unit, which once used to be the country´s biggest sugar producer, spring back to life.
That´s why the positive response showed by the current finance minister is being seen as a move toward “fulfilling the aspiration of PM Bhattarai”.
“If we are allowed to operate the factory, it will provide employment to 450 people and will indirectly benefit over 50,000 families, including farmers of Bara, Parsa and Rautahat,” said Ajay Duwedi, a member of parliament of Parsa, who submitted the proposal at the finance ministry on behalf of the cooperative.
As per the business plan, the cooperative will initially invest Rs 150 million in the closed factory, of which Rs 115 million will go into repair and maintenance of machinery. The cooperative has also set aside Rs 25 million as administrative expenses and Rs 10 million as working capital.
The business plan, however, does not mention how the cooperative plans to raise this amount. But Duwedi told Republica about plans to rope in region´s laborers, small entrepreneurs and sugarcane farmers as members, who, he said, would be asked to make contributions as shareholders.
Duwedi was also confident about people´s investment not going to waste as according to the business plan the factory will start generating profit from the third year of operation and earn profit of Rs 53.74 million by the fifth year.
“We will be able to meet this target if we get enough supply of sugarcane,” Duwedi said.
The cooperative, however, has not mentioned how much of sugarcane it needs to produce and how much of land is required in its business plan. It only says it plans to produce 127,500 quintals of sugar per year and spirit worth Rs 76.72 million per annum.
The cooperative, in its business plan, also has not mentioned the amount it plans to pay to the government for using the land and machinery of the factory.
The sugar factory owns around 600 bighas of land, while it is said to have huge stock of spare parts for the machineries installed in the premises.
Related story
Sugar mills threaten to stop paying farmers if govt fails to ch...
