BJMC leasing out 17 of the 25 factories that have been bleeding for decades
A year after shutting down all its state-owned jute mills, Bangladesh is now in the final stage of shortlisting bidders who sought to operate these once-vibrant factories under lease arrangements.
Bangladesh Jute Mills Corporation (BJMC) that used to operate the mills, now sifting through the lease proposals it received against an ‘expression of interest’ (EOI) bid floated in April to lease out 17 out of 25 closed factories.
Private jute sector entrepreneurs from the United Kingdom, India and Bangladesh submitted 59 proposals, some of these being joint venture lease-holding proposals, sources at BJMC told Dhaka Tribune on Sunday.
Deputy Secretary Imran Ahmed of the Textiles and Jute Ministry, who is overseeing the leasing process, told this correspondent on Sunday that it may take three more months for the government to award the leases to operate closed mills after exhausting the remaining procedures.
The procedures include shortlisting the most potential bidders and giving the shortlisted ones some time to prepare and submit their elaborate financial and technical proposals.
Starting its journey with 73 jute mills under its operation after 1971, the BJMC has none now, but there are still 3,000 staffers under its payroll.
Non-modernizing and not replacing the old machines in many of the mills, management inefficiencies and grafts led BJMC to loss-making and eventual shuttering the last remaining 25 public sector jute mills in July last year and laying off over 50,000 workers.
Officials at the Ministry of Textiles and Jute told Dhaka Tribune that after prolonged deliberations at a series of stakeholders’ meetings since July last year, the government had discarded the initial plan of operating the closed down mills under G2G (government-to-government) or PPP (public private partnership) arrangements.
“Instead, we have decided to lease out the mills to private investors under a five to 20-year agreement,” said a BJMC official, asking not to be named.
Leases would be awarded to the highest scoring bidders ranked on the basis of a combined score of technical and financial proposals weighted equally from among responsive bidders, he said.
The 17 mills to be leased out are: Platinum Jubilee Jute Mills Ltd, Crescent Jute Mills Ltd, Eastern Jute Mills Ltd, Khalishpur Jute Mills Ltd, Daulatpur Jute Mills Ltd and Star Jute Mills Ltd in Khulna, Hafiz Jute Mills Ltd, Gul Ahmed Jute Mills Ltd, KFD Jute Mills, MM Jute Mills Ltd and RR Jute Mills Ltd in Chittagong, Jessore Jute Industries Ltd and Carpeting Jute Mills Ltd in Jessore, Bangladesh Jute Mills Ltd and UMC Jute Mills Ltd in Narsingdi, Rajshahi Jute Mills Ltd in Rajshahi, and Jatio Jute Mills Ltd in Sirajganj.
Asked why BJMC was leasing out 17 of the 25 shut-down mills, an official said there were pending cases and some procedural complexities over the remaining eight mills, but “we’ll lease those out as well in a second phase.”
Both the ministry and BJMC officials told Dhaka Tribune that the government had moved earlier to operate two closed textile mills under PPP arrangement but things did not move much over the past two years.
Considering the employment generation potentials of the closed down jute mills, the government now thinks a lease process will ensure a faster resumption of production in all these mills under new private ownership.
Years of losses – mostly owing to graft, inefficiency, lax management and monitoring – prompted the government to close down the 25 state-run jute and carpeting mills in July last year. The losses incurred by the state-run jute mills have also been attributed to the BJMC’s failure to reinvest and repair worn out old machinery year after year.
For last one year, even though the jute mills have remained non-operational, around 3,000 BJMC officials and employees have been getting their salaries without much work in hand while thousands of jobless jute workers struggling ever since to cope with the new reality of life during a protracted pandemic situation.
Ministry officials think there is a possibility of experienced mill workers being reemployed in the same mills under private management if leases are awarded soon and new managements are linked up with the mill workers that government retrenched.
Many private sector entrepreneurs have expressed their concerns as to whether the process of leasing out jute mills to private sectors will actually achieve its objectives.
They said the banks would not offer finance for any medium-term contracts. It was also difficult to make profits by investing Tk 400 to 500 crore within such a short span of time. Besides, there was a risk of the government going for sudden policy shifts.
Textiles and Jute Ministry Deputy Secretary Imran Ahmed, however, held out the assurance that the lease contracts would not be for a short duration. “We’re saying it’s five to 20 years in the bid but definitely, this lease period will be further extended for a good performing lease.”
In its election manifesto in 2009, the Awami League had promised to make the jute industry profitable and in its early years in office it then even took initiatives of reopening two closed jute mills.
But in the last 11 years, the state-owned jute mills have incurred a loss of Tk4,859 crore, nearly Tk3,000 crore of which was in the last five years.
Jute is second only to cotton in the world's production of textile fibers. Bangladesh, India, China and Thailand are the leading producers of jute, which is also produced in southeast Asia and Brazil.
The BJMC official website says it inherited as many as 73 jute mills, having 23,836 looms, at the time of Bangladesh’s liberation in 1971. But over the years, while private-run jute industries have witnessed some success, the state-run ones have faltered, resulting in a sorry state of affairs in the public sector jute industry.