KATHMANDU, April 22, 2012
The government is preparing to resume operation of Biratnagar Jute Mill, making a U-turn on its previous decision to liquidate the loss-making state-owned enterprise and laying bare its intention to cling to labor-intensive industries where political cadres can be enrolled.
So far, the plan pushed by Ministry of Industry has received the backing of the Ministry of Finance.
“We have given our consent on condition that liabilities of running the factory do not fall on government shoulders,” a high-ranking official of the finance ministry told Republica on condition of anonymity. The ministry has also asked the government to first annul its previous decision to liquidate the company prior to providing a green signal on revival of the company.
“The case will now be forwarded to the cabinet for final approval,” the official said.
The cabinet, in April 2009, had decided to liquidate the over 75-year-old factory after it turned into financial liability to the government. Following the decision, the government had laid off over 700 staff at the factory providing them compensation of more than Rs 600 million.
But in February, 2012 during a meeting with members of the Jute Mills Operation Struggle Committee, Industry Minister Anil Jha expressed commitment to revive the closed factory and floated the idea of offering the debt-ridden factory to the private sector in lease contract.
Then in March, the Ministry of Industry wrote a letter to the finance ministry asking it to initiate the process of bringing the factory back into operation.
Since then a three-member committee comprising a technical expert and officials of the finance ministry and the industry ministry has been formed to conduct a detailed study on ways to revive the factory and legal hurdles that the government will have to overcome during the process.
As per the industry minister´s wish, the committee has recommended that the factory be handed over to the private sector in lease contract. “But it is yet to decide on whether to invite both domestic and international firms in the competition or limit the contest to domestic players,” the official said.
Prior to its closure, the government had handed over the factory to three different domestic companies either on lease or management contract. But none of them were able to run it successfully due to problems of overstaffing and frequent labor disputes.
Till the end of 2009/10, the company, with a net worth of Rs 2.29 billion, had generated a cumulative loss of Rs 2.3 billion, according to the government statistics. It also owes over Rs 720.4 million to various banks and financial institutions and Rs 2.27 billion in loans to the government.
Source: Republica
The government is preparing to resume operation of Biratnagar Jute Mill, making a U-turn on its previous decision to liquidate the loss-making state-owned enterprise and laying bare its intention to cling to labor-intensive industries where political cadres can be enrolled.
So far, the plan pushed by Ministry of Industry has received the backing of the Ministry of Finance.
“We have given our consent on condition that liabilities of running the factory do not fall on government shoulders,” a high-ranking official of the finance ministry told Republica on condition of anonymity. The ministry has also asked the government to first annul its previous decision to liquidate the company prior to providing a green signal on revival of the company.
“The case will now be forwarded to the cabinet for final approval,” the official said.
The cabinet, in April 2009, had decided to liquidate the over 75-year-old factory after it turned into financial liability to the government. Following the decision, the government had laid off over 700 staff at the factory providing them compensation of more than Rs 600 million.
But in February, 2012 during a meeting with members of the Jute Mills Operation Struggle Committee, Industry Minister Anil Jha expressed commitment to revive the closed factory and floated the idea of offering the debt-ridden factory to the private sector in lease contract.
Then in March, the Ministry of Industry wrote a letter to the finance ministry asking it to initiate the process of bringing the factory back into operation.
Since then a three-member committee comprising a technical expert and officials of the finance ministry and the industry ministry has been formed to conduct a detailed study on ways to revive the factory and legal hurdles that the government will have to overcome during the process.
As per the industry minister´s wish, the committee has recommended that the factory be handed over to the private sector in lease contract. “But it is yet to decide on whether to invite both domestic and international firms in the competition or limit the contest to domestic players,” the official said.
Prior to its closure, the government had handed over the factory to three different domestic companies either on lease or management contract. But none of them were able to run it successfully due to problems of overstaffing and frequent labor disputes.
Till the end of 2009/10, the company, with a net worth of Rs 2.29 billion, had generated a cumulative loss of Rs 2.3 billion, according to the government statistics. It also owes over Rs 720.4 million to various banks and financial institutions and Rs 2.27 billion in loans to the government.
Source: Republica
No comments:
Post a Comment