State-owned Udayapur Cement Factory has asked the government to arrange Rs 650 million either from the government’s resources or from foreign aid to increase its annual production to 60 percent of its capacity. Currently, it produces just 25 percent of its optimum capacity.

In a letter sent recently to the Ministry of Industry (MoI), which the ministry forwarded to the National Planning Commission (NPC), the factory said it requires Rs 650 million to purchase new machines and spare parts, as its cash reserve and resources are not enough to bring new equipment.

According to the factory, the factory machines are over 20 years old and are required to be replaced. “Some of the old parts have even turned obsolete,” the letter said. MoI Spokesperson Yam Kumar Khatiwada said the ministry has sought a detailed action plan from the factory after the Japan International Cooperation Agency (JICA) expressed interests to help the factory. The factory was established with Japanese assistance.

Khatiwada said the ministry also plans brief JICA officials about the factory’s status and jobs required to be carried out to improve its condition. However, the factory’s proposal has not mentioned about seeking JICA aid.

The factory has proposed implementing the ‘Industry Reform Programme’ worth Rs 730 million to increase its production to its optimum capacity. It plans to implement the programme in three phases—purchase essential spare parts with its own sources that requires Rs 80 million, purchase a diesel generator and carry out minor repairs from government resources that requires Rs 320 million and purchase machines and equipment from foreign aid which needs Rs 330 million.

Lately, state-owned factories established with foreign aid, have developed a tendency of seeking aid from donor country that helped establish the factory. Earlier, Janakpur Cigarette Factory, which was established with Russian assistance, had proposed seeking Russian aid for its revival.

Khatiwada, however, said the proposals were prepared after foreign countries expressed interests to help factories.

The cement factory was in red as of fiscal year 2009-10, according to the Finance Ministry. It incurred a loss of Rs 87.9 million in 2009-10 and its cumulative loss stands at Rs 1.77 billon. Khatiwada said attributed the factory’s loss to extended power outage hours.

source: The Kathmandu Post,19 April 2012