Leasing out state jute mills: Ministry vetting 12 proposals
Over a year past shutting down state-run jute mills, the government has made little progress in modernising and reopening them, up until now having merely selected some potential lessee proposals for ministry-level vetting.
The 25 mills were shut on July 1 last year due to heavy losses and excessive production costs, laying off more than 50,000 workers in three categories -- permanent, temporary, and substitute.
At the time, the Ministry of Textiles and Jute in a press release stated that the mills would be modernised and reopened through joint venture, public-private partnership, or a government-to-government agreement
This year, the government decided to lease them out and a nine-member inter-ministerial committee finalised the terms and conditions of the lease contracts and international tenders.
Bangladesh Jute Mills Corporation (BJMC) floated an international tender on April 27 to lease out the mills for a period of five to 20 years even though industrialists seem uninterested on the short-term deals.
The last date for submissions of expressions of interest was August 31 and the BJMC received around 55 proposals from home and abroad.
Of them, 12 have been selected by an evaluation committee and forwarded to the ministry for approval, said BJMC Chairman Md Abdur Rouf yesterday.
The BJMC does not want to "waste time" in signing agreements with the investors, he added.
He had earlier told The Daily Star that the government would not spend any money behind modernising the mills. At most, it could remove the old machinery if the investors wanted, he said.
The BJMC will remain as a monitoring body to oversee whether investors were complying with the terms and conditions.
It will also lay off 90 per cent of its 2,900 staff and officials and maintain a small workforce only to monitor compliance issues.
According to the lease terms and conditions, the main objective of operating state-owned jute mills under private management was to continue contributing to the economy through the production, diversification and export of jute goods.
It was to resume, as soon as possible, the productive utilisation of mill structures and facilities and create new employment alongside that for retrenched workers.
According to a fiscal 2018-19 assessment, the value of assets of the mills amounted to Tk 25,352.46 crore, with the highest being of those in the Chattogram region.
Fixed assets were valued at Tk 14,329.97 crore. Excluding accumulated depreciation, it was Tk 12,262.62 crore, mostly of those in the Dhaka region.
This includes permanent resources such as land, buildings and other establishments, equipment, furniture, transport and motor vehicles.
The conditions assert that the government would retain ownership of the mill premises.
The payment for the lease would need to be made as rent on a monthly basis. The first nine months will be provided as a grace period for mobilisation of resources. The rent would be increased by 10 per cent after every five years.
A total of 24 months' rent will have to be deposited as security before signing of the contract, refundable without interest on completion of the tenure.
The BJMC boss declined to disclose the rent amount and names of investors of the 12 proposals.
The BJMC sources said the initiative also sought relief from the burden of losses.
The latest data available was of fiscal 2018-19, when losses of the mills amounted to Tk 573.56 crore. In the previous fiscal year, it was Tk 498.16 crore.