The cabinet meeting held on Wednesday took the decision to this effect.
“We had to admit to the cabinet that past attempts to revive the failed and long-closed industry only added financial loss and burden to the government,” said a senior official at Ministry of Industry, disclosing the cabinet decision to myrepublica.com.
HTF was closed eight years ago after it posted a huge financial loss due to its failure to compete with imported textiles, mainly from India. Prior to the closure, the factory used to consume 1,200 tons of cotton and was employing about 1,200 people.
Amid soaring liabilities, the government had decided to privatize the factory -- a program that featured in the 10th Plan as well.
However, its privatization effort hit snag after no one applied to the bid that the government called some four years ago. Since then, the government had remained silent on the case, until the Maoist-led coalition came into the government last year.
The Maoist government instantly included the factory into the list of its three ´must revive´ industries and promised to re-inject additional capital and bring it into operation by mid-April, 2009.
The then Finance Minister Dr Babu Ram Bhattarai mainly expressed a sharp difference with the past assessments and claimed that the factory would enjoy a sound business as soon as the government made it mandatory for Nepal Police and Army to consume its products.
Going by revival plan, the government in April 2009 released Rs 80 million to the factory management for the renovation works and to bring the factory back into life. But the factory management since then had been buying additional time, saying they needed more time for repair works and to upgrade the production plant.
General Manager of HTF Bijay Raj Upadhyaya recently announced that the factory was ready to commence cotton imports and start operations from December this year.
“All those plans are halted now. We have decided not to waste more money in already closed public enterprises,” said the source. As no private party showed interest to buy the factory, taking it into liquidation was a natural choice for the government, he elaborated.
The statistics of Ministry of Industry shows that HTF holds eight acres of land, old buildings and about 15,700 sets of machines used in thread-making, dying, spinning and lung machines, among others. The factory was established with Chinese assistance.
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