Originally posted in The Daily Star on 24 July 2022
Mills shut yet BJMC incurring losses
Paying for maintenance, salary
Bangladesh Jute Mills Corporation (BJMC) has been continuing to incur losses, although more than two years have passed since the government closed down 25 state-run jute mills.
Insiders said delays in leasing out the closed mills to private investors and integration of existing employees to other state agencies caused the BJMC to suffer losses as it has to pay salaries and bear repairs and maintenance costs of the closed factories.
The state corporation estimates to have incurred losses of Tk 264 crore in fiscal year 2021-22, down from Tk 380 crore in the previous fiscal year, according to the BJMC budget.
“Now, we do not have any production. So, whole (that is spent) losses,” said Textile and Jute Secretary Md Abdur Rauf.
The government shut down the 25 mills on July 1, 2020 owing to consistent heavy losses and excessive production costs, laying off more than 50,000 workers in three categories — permanent, temporary, and substitute.
The government at that time declared that the closed factories would be modernised and reopened soon through various arrangements including joint ventures, public-private partnerships or government-to-government partnerships.
As per the plan, the BJMC in April 2021 called upon interested investors to submit expressions of interest for leasing out 17 of the mills for a period of five to 20 years.
It was able to initially award five investors lease of five mills. Of those, only two have started operations while two winners are yet to deposit the lease money and one declined to accept.
Recently, the BJMC issued notifications for the handover of seven more mills to private investors and only one investor deposited the security money. The remaining investors will have to deposit the security money by July 31, said officials.
Rauf, who was the BJMC chairman during the closure of the mills, said two of the mills leased out started production in February this year but the BJMC has not started earning anything as the lease holders would get a nine-month grace period.
Besides, integration of the BJMC’s existing employees into other government agencies is yet to be complete. Once it is done, the issue will be resolved, he added.
As per the plan, the BJMC will have over 350 employees out of its 2,750-member workforce to oversee the properties of the state mills.
The rest of the employees will be transferred to the public administration ministry for reemployment in other agencies.
“Once integration is complete, there will be no losses,” he said.
Before the mills went out of production, the corporation suffered around Tk 700 crore in losses, the highest in five-year, according to Bangladesh Economic Review 2022 published by the finance ministry.
Asked about delays in reopening the mills, he said investment would come from businesspeople. “What can we do if they do not come?” he said.
Entrepreneurs, mainly jute millers, earlier said investors would not be interested in investing for the short term.
The secretary said they attached the condition to protect public property from misuse.
Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said the losses of the BJMC was unacceptable at a time when the government was under pressure regarding public expenditure management.
“We were told that the government shut down the mills due to their huge losses and BJMC will lease out those to the private sector. That has not taken place while many workers have not got their arrears. The process of transferring mills to the private sector should be fast after closing the financial accounts of all mills,” he said.
Moazzem said reasons of such high losses should be examined. The process of transferring existing employees should be fast executed as the government is not benefiting from their economic contribution, he added.
The BJMC is incurring losses for its operational weakness and failure to complete the whole process, he said.