Biratnagar Jute Mills – the first industry of the country – has closed after nine months of operations as the government failed to provide subsidy to it.

We are forced to close the historical jute mill in Biratnagar after the government withdrew subsidy, asid the mills general manager Shyam Poudel.

Four hundred workers of the mill have now become jobless with the closure of the jute mill. Despite the mill´s capacity to run in three shifts, it was operating only one shift due to short supply of the electricity. The mill was producing 107 tonnes of jute products every day. It was selling fabric and yarn in nearby Indian markets.

The mill was shut down from Thursday after it could not compete with the Indian products due to lack of promised-subsidy, he said, adding that the government had been earlier providing 70 per cent discount on electricity tariff, customs discount while importing spare parts and relatively more electricity supply to the jute mills. “But the current fiscal year’s budget withdrew the facilities.”

Poudel blamed policy flaws and lack of cooperation from Nepal Electricity Authority (NEA) for the closure of the jute mill. “The load-shedding schedule was irregular the voltage supplied was also low that affected the production,” he said, adding that the industry have been demanding for uninterrupted power supply and voltage improvement. “However, the NEA did not listen to us.”

The government’s decision to roll back subsidies and facilities to the jute mills has not only forced the Biratnagar Jute Mills but also Katahari-based Baba Jute Mill. Out of 11 jute mills operating at Sunsari-Morang industrial corridor, six have already closed, according to Jute Industry Association (JIA).

Though two mills were shut after the government stopped providing facilities and subsidies, Guheswori Turbine Mill, CM Jute Mill, Pathibhara Jute Mill, Nicky Jute Mill had closed despite the government´s support.
The closure of the mills will reduce Rs 5 billion of export income and leave 15,000 employees jobless, the association said, urging to form Jute Development Board immediately, provide concessional loans, uninterrupted electricity supply, discount on electricity tariff and 10 per cent cash subsidy on the export of jute products.

Earlier last December, an Indian company Kolkata-based Winsome International had resumed the production – after five years of closure – after it won the contract on condition to pay Rs 13.5 million annually to the government.

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