The Industrial Promotion Board (IPB) on Thursday decided to issue new liquor manufacturer’s licences.

The decision is likely to attract controversy as it has been taken at a time when the country has been grappling with political crisis and a new government is set to be formed. After a number of companies failed to fulfil the government-set standards to obtain the licences a few years ago, new licence issuance was halted.

The government had set a tough standard for alcohol production after the market was flooded with substandard alcohol. As many as 26 companies had failed to obtain the licenses after the new standards came into effect.

Subsequently, the Department of Industry had recommended the Cabinet to take necessary steps against such companies. However, no action has been taken so far.

Thursday’s meeting chaired by Industry Minister Mahesh Basnet decided to implement the amended standards and issue new licences. “We have amended the standard. This opens the room for new companies to acquire the licenses and existing companies to expand,” Maheshwor Neupane, director general of IPB, said. “The government had decided to halt issuance of new licenses till the standards were amended. This is a regular process. The license has been opened as we have new standards in place now.”

According to Neupane, the private sector was continuously lobbying for the issuance of new licenses. “Moreover, we felt there is a need for more competition in the market otherwise the existing companies might have a monopoly.”

Several attempts to contact Minister Basnet failed.

When asked why the board decided to allow new players to enter the market at a time when the Cabinet is undecided on what to do with the companies that have so far have failed to obtain licenses, Neupane said: “We have been informed by the Cabinet it could not decide on the fate of such industries as they still have not missed the deadline for acquiring the licences.”

The deadline for these companies to acquire the licenses will end in December 2015.

The decision of the board will pave the way for industries producing alcohol and beer to boost their capacities and expand.

According to the board, applications seeking new licenses or expansion that have piled up at the Department of Industries will be taken to the board for further discussion.

Neupane said under the amended standards, there are a few changes related to land, environment, royalty and technology to be used.

The 132nd meeting of the board had decided liquor industries have to operate outside the valley, metropolitan and sub-metropolitan areas.

However, the rule will not be applicable to companies that had applied for the licenses before government declared new metropolitan and sub-metropolitan areas.