Plants still run at half their capacity

- Post Report, Kathmandu

May 25, 2017-

Average industrial capacity utilisation in the country stood at 54.2 percent in the first six months of the current fiscal year, indicating manufacturing plants are still operating at around half their capacity, thus reducing production. 

Industrial capacity utilisation stood at 39.5 percent in same period last fiscal year, according to a mid-term economic activity review report published by the Nepal Rastra Bank (NRB). Industrial capacity utilisation had fallen drastically in the last fiscal year because of India-imposed trade blockade, which chocked supplies of raw materials, petroleum products and other supplies.

Average industrial capacity utilisation stood at 51.3 percent in the first six months of the fiscal year 2014-15.

Industrial capacity utilisation improved in the current fiscal year because of improvement in supply of the electricity, post-earthquake reconstruction works and absence of strikes, according to the NRB report. 

During the review period, capacity utilisation of factories that manufacture noodles, vegetable ghee, edible oil, animal feeds, beverages, cement, iron rod and paper, among others, improved. On the other hand, capacity utilisation of units that manufacture readymade garments, electricity wire, soap, bricks and cigarette, among others, fell. 

“Uninterrupted supply of electricity since October has allowed majority of the factories to operate for longer hours resulting in increased capacity utilisation,” said Pashupati Murarka, former president of the Federation of Nepalese Chambers of Commerce and Industry. “Also, hike in demand for various industrial goods due to increase in inflow of remittances prompted manufacturing units to raise production.” 

Published: 25-05-2017 08:10

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