Industrialists seek long-term lease, funds to run state-owned jute mills

Jute sector industrialists have expressed their interest in running the 25 state-owned jute mills – which the government shut down in June this year – under specific conditions. 

They want to run the jute mills on a long-term lease, and not under the Public-Private Partnership (PPP) funding model. 

The Bangladesh Jute Mills Association (BJMA) and Bangladesh Jute Spinners Association (BJSA) also proposed the government to create a large fund to help them re-launch production at those mills.

Representatives from the organisations made the proposals in a meeting held at the secretariat on Thursday. 

Speaking at the programme, presided over by Textile and Jute Minister Golam Dastagir Gazi, business leaders said almost all machineries of the Bangladesh Jute Mills Corporation (BJMC) are out of order and a lot of new machineries are currently available.

It used to take around 60-70 workers to make products from one tonne of jute, but millers can now use modern machineries and only 15-20 workers to produce the same amount of goods, they added. 

Using old machineries will cause the production cost to rise, which in turn will make it difficult for millers to remain competitive, the businessmen said. 

Under the circumstances, they sought concessional loans to purchase modern machineries for the jute mills, as they are not interested in running the factories with old machineries.

The businessmen further said they will need around Tk100-400 crore to get those jute mills running. They requested the government to create a large fund for this reason. 

If the government agrees on this issue, the Ministry of Finance and the Bangladesh Bank can take the final decision on the matter, industrialists said at the meeting.

Mentioning that Bangladesh's past records in using the PPP model is not very good, the business leaders said no one has achieved any notable success with the PPP so far, and no businessman wants to run the mills for a short period of time.

The mills are more than 60 years old, and it would take around 1-2 years just to clean them up. It would then take around five years just to launch the mills with new machineries, they said.

As the government is not interested in selling the closed down jute mills, the businessmen are seeking a lease for at least 99 years. If that is not possible, then they seek a lease for at least 50 years to run those factories properly.

Responding to a query, BJSA's Chairman Md Jahid Mia told The Business Standard, "We have presented our proposal to the committee [which was tasked by the prime minister to make a report on how the state-owned mills will be run in the future]. 

"It will make a decision on the matter after due consideration. As for the creation of a fund, the finance ministry and the Bangladesh Bank could make a decision about it."

Jahid Mia continued, "To run a private business, we must take loans from banks. So, there is always a pressure to pay back the money. Mill owners also have to pay the salaries of their staff and workers. They have a lot of responsibilities.

"We will not be able to establish the business properly after taking the jute mills on a lease for only ten or less years. And if we fail to run the business well we will not be able to pay back the loans with interest. The workers will also be deprived of their salary."

BJMA's Chairman Mohammed Mahbubur Rahman Patwari said, "We need to hold more meetings with the committee to discuss the issue. It will then submit a report. After that, a final decision will be made following Prime Minister Sheikh Hasina's approval.

"Members of the BJMA and BJSA are major investors in the jute sector. They will become interested in investing more in this sector if the government announces an attractive policy. The jute mills can be distributed to the businessmen through a tender process."

The government on June 28 announced that 25 jute mills under the BJMC would shut down, 24,886 workers would be sent to retirement, and their dues would be paid in full within September this year.

However, the BJMC has yet to pay any dues to the workers.