Kathmandu: Supreme Cement that has been producing 400 tons of cement and 200 tons of clinker every day is on the verge closure. It is not because of power shortage or labor problems, but because the company will soon run out of raw material and fuel as Indian exporters have declined to supply them in Indian currency after the scrapping of duty refund procedure (DRP) on March 1.

The company had been using firebricks imported from Dalmia Refractories and petroleum coal from Reliance in India. But both the Indian companies are now demanding Supreme Cement to pay for its purchases in US dollar if it wants to maintain supply.

"It is already 24 days since we have operated with reserve stocks and that will run out soon. Once that happens we will be forced to shut down the factory,” said Pashupati Murarka, promoter of the company and vice president of Federation of Nepalese Chamber of Commerce and Industries (FNCCI).

Supreme is not the only company that is facing this problem. All cement factories are fast running out of raw materials, particularly firebricks and petroleum coal. "Unfortunate for us, we can not pay the supplier in US dollars as Nepal Rastra Bank (NRB) has opened payment in dollar for only 250 items and items we import are not included in that list,” said Murarka.

Given the situation, all cement factories could shut down in the near future, he said.

Then there are new problems. Nepali firms that recieved supplies against IC payment too have been compelled to pay more as Indian exporters have forced them to pledge 10 percent collateral on the total value of the consignments.

Their condition is that they will refund the collateral once the importing party furnish them customs document proving the supplies crossed the border. They are refunding the money too. “But the problem is our customs officials do not accept the collateral is refundable amount and are charging excise duty on that amount too,” said Murarka.

Aerated drinks manufacturers like Barun Beverages, beer manufacturers and many other companies are currently facing this problem.

“The nature and extent of problem is different. But lack of India and Indian exporters´ support in the wake of termination of DRP has affected all the Nepali firms importing excisable items,” said another official of FNCCI.

Govt deaf to private sector´s plea
Despite such problems that fundamentally goes against bilateral deals agreed by the two governments and the central banks, the private sector is unable to find people in Ministry of Commerce and Supplies to support their cause.

"We are constantly asking government officials what could be the reason behind this problem? Sadly, they have nothing to say to us,” said Murarka.

That is not all. Following government´s silence, the business community even approached the Embassy of India in Nepal, seeking explanations behind rejection of Indian exporters to supply goods against IC. But even that has not been of any help.

“Officials in both MoCS and Embassy say the governments have changed nothing in the procedures and practice, hence, there should be no problem. But our reality is something else,” said Murarka.

On being queried why the government has not taken over the industries´ complaint, officials like Commerce Secretary Lal Mani Joshi said they were not aware of reasons behind the problem. Just like a week ago, he reiterated that he had approached the Indian counterpart seeking explanations but have not heard anything so far. Surprisingly, Joshi even said there were no problems any more.

The problem on import of excisable items surfaced after Indian exporters demanded Nepali traders to make payment in USD following the scrapping of DRP arrangement on March 1. That brought import of such items to a grinding halt for about two week.

Though some exporters have started supplying goods against IC, entrepreneurs said their demand for collateral had created new problem.

"Exporters from Indian states including Gujrat and Maharastra are still asking us to make payment in dollar,” said Murarka. Those supplying against IC too have inflated the cost for them.

source: republica,25 March 2012