Chitwan, Nepal, 30 November 2011 -- Bhrikuti Paper and Pulp Limited, the largest paper mill in the country, will be shut down permanently.
The paper mill, in Gaindakot, Nawalparasi district, is owned by the Golcha Organization. The company was established in 1985, with support from China. It was privatized in 1992, and Golchha Organization has been operating the factory ever since.
The annual general meeting of the company, held 24 October, endorsed the special proposal of management to close down the factory. Following approval of the proposal, management has filed an application with the government through the Department of Labor (DoL) asking permission to lay off all its staff.
Workers, meanwhile, vented ire against the government and the factory promoters for showing little seriousness in continuing the factory operations. Some of the workers even claimed that the promoter of the factory is planning to develop its land into housing.
The paper factory halted productions in March 2011, citing shortage of raw materials, more than 16 hours of power cuts, and declining demand for the paper it produced, among others.
Management said the factory was operating undercapacity for years. The factory had an installed capacity of producing 80 tons of paper a day.
The factory is employing 485 workers, including 333 permanent employees. However, after management realized that there was little chance of reviving the business, it laid off around 150 temporary workers hired on contract.
Following a decision on 24 October that allowed the promoter to permanently shut down the factory after clearing all loans liability, management on 30 October lodged an application at the DoL, seeking its permission to lay off all remaining staff members.
On 22 November, management issued a notice that the factory would not be able to pay salaries to 333 permanent staff for the period of eight months when it remained out of operation. The announcement, however, has drawn serious protests from the workers.
"The denial of the management to pay salary from the day the machines were turned off is against the existing law," said Ram Sharma, coordinator of Workers´ Protest Committee. The committee has requested that the Labor Office freeze the land owned by the industry until it pays staff´s salary dues.
Before the closure, the industry was producing as much as 1530 tons of paper a month. It was selling paper at around NPR 60,000 per ton.
"The closure of the factory has forced the country to import an additional NPR 90 million worth of paper every month," according to a factory official. Its permanent shut-down would increase the country´s dependence on import to fulfill local demand for paper.
Altogether, six paper mills, including Bhrikuti Paper and Pulp, were operating in the country and together they were producing 150 tons of paper every day. The productions, however, was sufficient only to meet half of the demand, which is estimated to be around 300 tons a day.