59 local, Indian and British investors seek to run Bangladesh’s closed jute mills

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File photo: While some private jute mills generate profits, state-run BJMC factories have suffered losses for years, which many attribute to mismanagement, irregularities and corruption. Dhaka Tribune

BJMC leases 17 of 25 factories that have been bleeding for decades

A year after shutting down all of its state-owned jute mills, Bangladesh is now in the final stages of shortlisting bidders seeking to operate these once dynamic factories on lease contracts.

Bangladesh Jute Mills Corporation (BJMC), which operated the factories, is now sifting through lease proposals it received against an “expression of interest” (EOI) offer launched in April to lease 17 of the 25 closed factories.

Private jute contractors from the UK, India and Bangladesh have submitted 59 proposals, some of them joint venture leasing proposals, BJMC sources told Dhaka Tribune on Sunday.

Deputy Secretary Imran Ahmed of the Textiles and Jute Ministry, who oversees the leasing process, told this correspondent on Sunday that it could take another three months for the government to award leases to operate closed factories after exhausting procedures. remaining.

The 2020 shutdown sent around 25,000 workers from 26 jute mills operated by BJMC into early retirement under a program called “Golden Handshake” Rajib Dhar / Dhaka TribuneThe procedures include shortlisting the most potential bidders and allowing them time to prepare and submit their elaborate financial and technical proposals.

Beginning its journey with 73 jute mills under its operation after 1971, BJMC no longer has any, but there are still 3,000 employees in its pay.

Failure to modernize and replace old machinery in many spinning mills, management inefficiencies and transplants led BJMC to make losses and close the last 25 public sector jute mills in July of the year. last and lay off more than 50,000 workers.


Read also – Operations of 25 state-owned jute mills go private


Officials from the Ministry of Textiles and Jute told the Dhaka Tribune that after lengthy deliberations in a series of stakeholder meetings since July last year, the government had abandoned the original plan to operate the factories. closed under G2G (government to government) or PPP (public-private partnership).

“Instead, we decided to lease the mills to private investors under a five to 20 year deal,” a BJMC official said on condition of anonymity.

Leases would be awarded to the highest-rated bidders, ranked on the basis of a combined score of weighted technical and financial proposals equally among responsive bidders, he said.

The 17 factories for rent are: Platinum Jubilee Jute Mills Ltd, Crescent Jute Mills Ltd, Eastern Jute Mills Ltd, Khalishpur Jute Mills Ltd, Daulatpur Jute Mills Ltd and Star Jute Mills Ltd in Khulna, Hafiz Jute Mills Ltd, Gul Ahmed Jute Mills Ltd , KFD Jute Mills, MM Jute Mills Ltd and RR Jute Mills Ltd in Chittagong, Jessore Jute Industries Ltd and Carpeting Jute Mills Ltd in Jessore, Bangladesh Jute Mills Ltd and UMC Jute Mills Ltd in Narsingdi, Rajshahi Jute Mills Ltd in Rajshahi, and Jatio Jute Mills Ltd in Sirajganj.


Read also – Khulna witnesses the closure of 7 private jute mills


When asked why BJMC was leasing 17 of the 25 closed factories, an official said there were ongoing business and procedural complexities for the remaining eight factories, but “we will also be leasing them in a second phase.” .

The ministry and BJMC officials told Dhaka Tribune that the government earlier decided to operate two shuttered textile factories under a PPP deal, but things haven’t changed much over the past few years. last two years.

Considering the job creation potential of the closed jute mills, the government now believes that a rental process will ensure a faster resumption of production in all these mills under new private ownership.

Years of losses – mostly due to corruption, inefficiency, lax management and control – prompted the government to shut down all 25 state-run jute and carpet factories in July of the year. last. The losses suffered by the state-run jute mills have also been attributed to the failure of BJMC to reinvest and repair old worn out machinery year after year.


Read also – Minister of Jute: All workers under BJMC will receive arrears in November


Over the past year, although jute mills have remained non-operational, around 3,000 BJMC officials and employees have received their wages without much work on hand while thousands of jobless jute workers have since struggled to cope. the new reality of life during a protracted pandemic situation.

Ministry officials believe that there is a possibility that experienced factory workers will be rehired in the same privately run factories if leases are granted soon and new directions are linked to workers in factories that the government has sacked.

Many private sector entrepreneurs have expressed concerns about whether the process of leasing jute mills to the private sector will actually achieve its goals.

They said the banks would not offer financing for any medium-term contracts. It was also difficult to make a profit by investing 400-500 Tk crore in such a short period of time. In addition, there was a risk that the government would turn to sudden policy changes.

However, the Deputy Secretary of the Ministry of Textiles and Jute, Imran Ahmed, gave assurances that the rental contracts would not be short-lived. “We say the offer is five to 20 years, but certainly that lease period will be extended further for a good performance lease.”

In its electoral manifesto in 2009, the Awami League promised to make the jute industry profitable and, in its first years in power, it even took the initiative to reopen two closed jute mills.

But over the past 11 years, state-owned jute mills have suffered a loss of Tk 4,859 crore, of which nearly Tk 3,000 crore has been lost in the past five years.

Jute is second behind cotton in the global production of textile fibers. Bangladesh, India, China and Thailand are the main producers of jute, which is also produced in Southeast Asia and Brazil.

The official BJMC website says that it inherited 73 jute mills, with 23,836 looms, at the time of the liberation of Bangladesh in 1971. But over the years, as the private jute industries have known some success, state-run ones faltered, resulting in a deplorable situation in the public sector jute industry.

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