Mills feel chill wind of power cut

"All five spinning mills in the country could meet

the same fate any time in the future"

THIRA L. BHUSAL & PRABHAKAR GHIMIRE
KATHMANDU, Oct 23

Enough is enough. For Jyoti Spinning Mills (JSM), already shattered by a series of problems, hours-long load shedding was the last straw.

A multi-million-rupee plant established 17 years ago in Parwanipur as one of the most advanced spinning mills in all of Asia, JSM is now on its deathbed.

Other problems could have been managed over time. But the intolerably long hours of power cuts devastated the mill's prospects, said Roop Jyoti, a major promoter.

Knocked flat by losses running into millions of rupees that accumulated over more than a year of power outages, the promoters eventually decided to shut it down.

JSM had a workforce numbering around 1,000, and its machinery needed to be in operation 24 hours a day to fully exploit the capacity of its 4 MW power supply.

"Inadequate and irregular power supply from Nepal Electricity Authority (NEA) to the Birgunj-Simara Industrial Estate inflicted a loss of Rs 160 million over the last year," said Jyoti, who is also a promoter of Jyoti Group.

"We had managed to keep the mill running despite various obstacles. But the load shedding we suffered during the last 18 months was too much," Jyoti said explaining why the mill, which was earning more than Rs 20 million in annual profits, had to be wound up.

JSM, whose annual turnover hovered around Rs 750 million, closed down saddled with liabilities totalling Rs 680 million. The company has 6,000 ordinary shareholders, and its total investment amounts to over Rs 800 million.

Jyoti said the mill's power situation worsened immediately after NEA began providing 10 MW supply to a new company in the already power-deficit area. Though JSM is the latest victim of this perennial problem, the erratic and insufficient power supply has taken a heavy toll on industries across the country.

Jyoti estimates that the Parwanipur area's power requirement is at least 40 MW, but it gets only 30 MW.

Parwanipur staggers under four hours of load shedding daily: two hours in the morning and two hours in the evening.

"We could have managed to stay afloat if the power cut had been limited to once a day," Jyoti said, "but NEA didn't listen to our pleas."

An NEA official said it could not change the load shedding schedule at the request of one consumer. "NEA can reduce power cuts to once daily if a customer seeking such a privilege makes arrangements for a separate supply system directly from a transmission line," Sher Singh Bhatt, director of NEA's system operations department, said. "Otherwise, we cannot cause trouble to other consumers just to satisfy one or two."

Reliance Spinning Mills is another factory that has recently been kayoed by power cuts.

"All five spinning mills in the country could meet the same fate any time in the future," Jyoti said. Nepal's industrial entities have been in deep trouble after NEA last year imposed load shedding of up to 48 hours a week.

According to the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the business sector alone contributed around Rs 107 billion in taxes during the last fiscal year.
Of the total Rs 13 billion income tax paid by the sector, more than 92 percent came from 350 big industries that are in trouble due to irregular electricity supply.

The business community has frequently drawn the attention of the government saying that power outages cause massive losses to the industry. They said power deficit had resulted in a 40 percent decline in productivity.

Solutions

Industrialists have concluded that the government has failed utterly to provide basic requirements including electricity, security and law and order. Now, they are thinking of finding solutions on their own, not to wait for the government to act.

"We are planning to start a thermal plant in the area as an interim arrangement because we can't wait until hydro projects get completed," Jyoti said. According to Jyoti, a thermal plant can start producing power in six months. The plan is at the feasibility study stage. Thermal power is costlier, but factory owners are unfazed.

"Industrialists would be happy to pay Rs 12 per unit," Jyoti said. Another option is importing power from bordering towns in India. Jyoti said it was a better alternative, but the government had to take the initiative.

THE KATHMANDU POST