Govt in talks to give insolvent Hetauda Textile Factory to Nepal Army

Kathmandu, January 31

Prime Minister Pushpa Kamal Dahal has held discussions with the Nepali Army to revive the insolvent Hetauda Textile Factory.

In a high-level meeting held at the Office of the Prime Minister and Council of Ministers today, the Nepal Army briefed the Prime Minister about the feasibility study regarding the resumption of the factory.

The feasibility study follows the government announcement to explore possibilities for reviving the closed industries in the government policies and programmes for the current fiscal year.

The textile factory was established in 1975 under in financial and technical assistance of the Chinese government and with the investment of the Nepal government halted its production in 2000. The then royal government in 2003 decided to close it.

The study report highlighted the lack of market management, lack of technology advancement as per the need of time, the power outage issue, overstaffing and the lack of managerial efficiency are among the factors leading to the closure of the factory.

The report states the possibility of reusing some factory structures and machinery after maintenance. It also states that the Nepal Army Welfare Fund has sufficient budget to operate the industry, adding that most of the raw materials needed for the factory are available within the country.

According to the report, the factory will have no problem for the market if revived as the Nepal Army is one of the major potential consumers with Nepal Army personnel being likely users of garments to be produced by it.

The factory has 8,100 square metres of land under its ownership.

As the report states, the revival of the industry is needed to contribute to the national industrial development and to contribute to the gross domestic product, to send a positive message to the world market, to boost national sufficiency, in import replacement and the creation of employment opportunities.

The study task force has also proposed the outline for the re-operation of the Hetauda Textile Factory. The proposed plan along with a three-year work plan has the target of manufacturing approximately 2.6 million metres of cloth.

A policy decision regarding this would be made in the current fiscal year and the industry would be handed over to the Nepali Army, which will prepare the DPR, and select and purchase new machinery goods.

Similarly, it is stated in the proposed outline that test production would be started in the coming fiscal year by completing the construction of the infrastructure and the purchase of machines and equipment. It is stated that the machines would be added, the industry’s capacity expanded and regular production started by conducting the feasibility study for the operation of Butwal Spinning Mills and managing the raw materials.

The preliminary cost estimate for re-operating the Hetauda Textile Factory is Rs 1.93 billion and the annual operation cost is Rs 780 million. The task force has concluded that the factory will be in a position to make a profit, replacing the investment cost, after nine years of its re-operation.

The task force has also proposed the policy and legal support of the government for the re-operation of the Hetauda Textile Factory.

Speaking in the post-briefing meeting, Dahal said the study conducted by the Nepali Army centring on the re-operation of the industry is significant.

“The Nepali Army has carried out a sound study. I will hold one round of discussions on this at the political level also. A small team can also be formed at the government level for the study. We will take a concrete decision by a meeting of the Council of Ministers after that,” he said.

On the occasion, the Prime Minister was of the view that privatisation of industries led to a fall in productivity and the shrinking of job opportunities.