MoF plans cooperative model to reopen closed industries

The Ministry of Finance (MoF) is mulling over a new concept aimed at bringing closed and bank-owned industries back into operation through a cooperative model, directly involving both the private sector and the local stakeholders. An official of the ministry informed myrepublica.com that the concept would first focus on reopening those industries that were pledged as loan collateral to banks but were later owned by the lending banks after borrowers failed to repay the loans.

"We are first exploring possibilities of industries that are under the lending banks´ ownership, not in operation and have a strong backward linkage to the livelihood of common people," said an official at the MoF. It was a big economic loss to close the industries that could be brought into operation, he said, adding that the ministry is planning to initiate the model by bringing Basuling Sugar and General Industry back into operation. The official further said that the committee to Monitor Actions against Willful Loan Defaulters, formed by the government under the leadership of Constituent Assembly member Dr Hari Roka, had started exploring financial as well as technical viability to reopen the sugar mill that was closed some five years back.

Under the model that is under consideration, the sugar mill that is under the ownership of Agriculture Development Bank Limited (ADBL), the lead of a group of banks that jointly extended loan to the mill, will handover the management and operation of the mill to a consortium participated by experts and local farmers engaged in producing sugarcane. The sugar mill was closed down following dispute between sugarcane producers and the mill management. Allowing the representatives of farmers can greatly help to mitigate possible misunderstandings. A high-level delegation of the committee visited Kailali district last week and held discussions with the local farmers on the proposed model, he said.

"If things go as planned, the MOF will call for proposal from private sector to participate in the cooperative, which will also incorporate local farmers," said the official and added that the cooperative would negotiate with the bank that owns the mill to set terms and condition for a long-term lease. The official made it clear that private sector would be allowed to manage the mill while allowing representation of farmers in the management board, he added. Basuling Sugar and General Industry, mainly owned by son of former Prime Minister Lokendra Bahadur Chand, was blacklisted in August 2004 after it failed to repay loans extended by the consortium led by ADBL.
Source: Republica