Print Edition - 2016-02-12 | MONEY
Factories struggling to resume full-fledged ops
- shortages of raw materials and fuel
Feb 12, 2016-
The five-month-long Tarai unrest and border obstruction has come to an end, but factories in the Sunsari-Morang Industrial Corridor are still struggling to resume full-fledged operations as shortages of raw materials and fuel persist.
Most factories have started ordering raw materials as the border closure has been lifted. Traders said factories were also trying to hire back workers who had been laid off during the crisis period.
Moreover, lack of financial resources has also prevented them from resuming production at full capacity.
“The border restriction has been lifted, but factories are still grappling with multiple problems,” said Shiva Shankar Agrawal, president of the Industries Association of Morang.
He added that cargo truck drivers and Kolkata port workers had been obstructing shipment of raw materials to Nepal for the last three days. Besides a raw material shortage, factory owners are facing a diesel crisis which has made them unable to operate at full capacity. Pawan Kumar Sarda, president of the Morang Merchant Association, said that factories in the corridor had started ordering raw materials in large quantities as they fear a repeat of the border problem.
Fuel flows along the Biratnagar-Jogbani route had improved a long time before the obstruction at the Birgunj-Raxaul border point was lifted last Friday, but the government has not been able to manage the distribution system, he said.
“As a result, factories in the industrial corridor are still facing hardships despite an improvement in fuel supplies.”
Meanwhile, international buyers have stopped placing orders for Nepali products due to uncertainty over when the closed factories will resume operation. “Most product brands have been losing their value, and overseas export orders for various products have been cancelled,” said Bhola Dulal, proprietor of Purwanchal Lube Oil.
The nearly 500 factories in the corridor have incurred a combined loss of Rs20 billion in the last five months. “It will be a challenging task for them to revive their brand value,” he said.
Dulal added that many factories were yet to receive substantial payments from
buyers. “If they fail to raise the money, they could go bankrupt.”
Factory owners are also worried about bank interest payments and the outstanding detention charges which they have not settled till now.
Banks have lent more than Rs50 billion to the factories in the Sunsari-Morang Industrial Corridor. Out of the total loans, Rs32 billion has gone to factories in Morang. The total investments in the industrial corridor are worth nearly Rs100 billion.
Most factories in the zone produce various food products like rice, pulse, edible oil, flour, ghee, noodles, beaten rice, biscuit and chocolate.
Published: 12-02-2016 09:04