Nepal | April 19, 2019

Tarai turmoil triggers revenue losses

Continuous strikes and bandhs hurt production, distribution of manufacturing firms

Himalayan News Service

Kathmandu, September 7

Protests launched by different Madhesi parties in the Tarai belt since mid-August have started affecting production of various manufacturing companies, including multinationals, triggering revenue losses worth millions of rupees per day.

These protests, including bandhs, and lately curfew in Birgunj to quell these agitations, have severely affected movement of cargo vehicles, hampering imports of raw materials and transportation of finished goods.

“These problems have affected production, distribution and sales of goods at our company,” Ravi KC, corporate vice president of Surya Nepal, one of the largest private sector enterprises engaged in the business of cigarettes, matches and readymade garments, told The Himalayan Times. “As a result, our plants in Simara are now operating at 50 to 60 per cent of the capacity.”

Another multinational company engaged in production of fast moving consumer goods, which did not want to be named, also made similar comments.

“Our production has been quite badly affected by virtual halt in movement of vehicles,” an official of the company said.
It is not only multinational companies operating in the country that have been hit by protests and curfew. Many local manufacturing companies are also facing similar problems.

“The bandhs and protests of other kinds have badly affected movement of vehicles. This, on the one hand, has hit supply of raw materials and, on the other, affected supply of finished products to the market,” said Ravi Bhakta Shrestha, vice chairman and managing director of NE Group, which also operates National Soap Industries in Hetauda. “These problems are inflicting revenue losses to the tune of millions of rupees per day on factories operating in the Tarai.”

The cost of per day of nation bandh stands at Rs 1.79 billion, according to working paper titled ‘The Economic Cost of General Strikes in Nepal’ made public earlier by Nepal Rastra Bank. Considering investment of around Rs 170 million required to build every megawatt of hydro project, it could be said the country loses money enough to build 10.5 megawatts of hydroelectric plant due to per day of bandh.

The latest series of general strikes in the Tarai region began on August 15. These protests had badly affected vehicular movement in Birgunj area, a major border point from where foreign goods enter Nepal.

To bring the situation under control, the government has clamped curfew in Birgunj area since August 31.Because of this, raw materials imported by many manufacturing companies are either stuck at Inland Clearance Depot (ICD) or customs area in Birgunj, where cargo trucks bringing in goods from India have formed a queue as long as 30 km. To facilitate movement of vehicles, the government has been providing escort service.

“But the initiative taken by the government has not normalised the situation. This is because very few vehicles are being escorted per day,” said President of Nepal Freight Forwarders Association Rajan Sharma, adding, “I don’t know why the government has not been able to effectively provide escort service in Birgunj-Hetauda segment, which is not very long.”

The situation is almost the same in other border points located in Biratnagar, Bhairahawa and Nepalgunj.While manufacturing companies have started facing shortage of raw materials due to these problems, disruption in movement of vehicles has also made it difficult for firms to transport finished goods to the market, which is affecting their sales.“If this continues we will have no option but to shut down the factories,” said Shrestha.

A version of this article appears in print on September 08, 2015 of The Himalayan Times.

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