The closure of Biratnagar Jute Mill has been blamed on the government’s failure to upgrade the power supply line and removal of subsidies on electricity bills. The jute industry based in Eastern Nepal has fallen on hard times as its products cost more than the competition.

Winsome International, an Indian company which took over the factory’s operations two years ago, has been asking the government to provide a 33 kVA electricity line as was promised.

It said that the government, instead of providing a high voltage electricity line, even discontinued the 70 percent subsidy on electricity bills being provided to jute factories in the country, thus crippling the entire jute industry.

Winsome International had undertaken the responsibility of operating the oldest factory for the next 25 years by agreeing to pay a lease amount of Rs 13.5 million annually.

Shyam Paudel, manager of Biratnagar Jute Mills, said they failed to receive the facility that the government had promised earlier. “We are left with no option but to close down the factory.”

The Indian company said that the board of Biratnagar Jute Mill also failed to fulfil its various commitments for unhindered operation of the factory.

The Border Security and Customs Patrol Units of the Armed Police Force (APF) have been using the land and residential buildings of the jute mill for the last five years which the factory’s board had promised to relocate, according to the Indian company.  Winsome and the board had agreed that the area would be evacuated by the time the mill went into operation.

According to Paudel, the APF has been occupying most of the space meant for the mill’s resident officials. “We strongly demand their immediate evacuation from the factory premises,” said Paudel. He added that the management was ready to resume operations if the government installed a 33 kVA power line.

Before Biratnagar Jute Mill reopened two years ago under Winsome’s care, it had been closed for four years as a result of political intervention and labour unrest. The factory employs 425 people.

It produces 7 tonnes of jute daily even though it has an installed capacity of 30 tonnes daily. Winsome is reported to have poured more than Rs 200 million into the mill to get it back into shape.

Raghupati Jute Mill, Arihant, Swastik, Chandra-Shiva, Pathivara and Nepal Jute are among the jute mills still running. They are also struggling for survival.

With Nepali jute factories facing tough competition from heavily subsidized Indian and Bangladeshi jute industries, Nepali jute producers had recently requested the Indian Embassy to help them urge Food Corporation of India to purchase their products.