Kathmandu, March 8:

Burdened by the prolonged Terai unrest, fluctuating international prices and no reprieve in the quota regime of exports to India, the vegetable oil manufacturers in Nepal today find themselves in the dock.

The Terai bandh and subsequent disruptions in transport have resulted in huge losses for vegetable oil and vanaspati ghee refineries as most of them are located in the Terai.

Unofficial estimates put the losses at about one to Rs 1.5 million per day per factory, even as customs offices which used to generate a revenue of approximately Rs 100 million are doing zero business today.

“It is a question of our survival. If this continues, Nepal’s economy may be severely jeopardised,” fears Manish Kumar Agrawal, treasurer of the Nepal Ghee and Oil Manufacturers’ Association.

Agrees Rajkumar Agrawal, immediate past-president of the organisation and the chairman of the Shiv Shakti Group. “The scenario is so bad that many industrialists may be heading towards bankruptcy soon,” he says.

Nepal imports raw materials like soya bean and crude palm oil (CPO) from countries like Brazil and Argentina, Malaysia and Indonesia and then the finished product is manufactured in refineries located in the Terai region.

While Nepal has a dutyfree access to India for exporting vanaspati ghee, a fixed quota of only 100,000 tonnes has been stifling production in Nepal, claim manufacturers. “We can’t export beyond this limit even if we wish to pay duty,” points out Manish Agrawal.

Nepali factories have an installed capacity of producing over 400,000 tonnes. “But our factories are running at only 40 per cent capacity,” he adds.

Hopes of any increase in the quota were dashed as the Indo-Nepal Trade Treaty was

renewed without any changes earlier this week. Besides 100,000 tonnes from Nepal, India allows import of 250,000 tonnes of vanaspati ghee from Sri Lanka and some additional quantities from Bhutan.

The international prices for vegetable oil have reportedly registered a 25-30 per cent hike in the last three-four months. “Besides raw material costs, freight charges and shipment costs too have gone up,” points out Vikash Dugar, member of the Nepal Oil Manufacturers’ Association.

Oil story

• No of oil industries: 18

• No of functional industries: 16

• Total production: 190,000 tonnes

• Indian market: 100,000 tonnes

• Chinese market: 20,000 tonnes

• Local market: 40-50,000 tonnes

• Unorganised market: Rest