Government evaluating proposal

Kathmandu, December 16:

The Khetan group has submitted a proposal to the Finance Ministry to take over the management of the Nepal Metal Company, which has a potential turnover of US $600 million (Rs 38 billion), a foreign ministry official said.

Nepal Metal Company, in limbo for decades, is an entity set up to extract zinc and lead in the Ganesh Himal region.

Shiva Bahadur Rayamajhi, the joint secretary of the Corporation Coordination Division of the Finance Ministry, admitted that the Khetan group has submitted a proposal to take over the management of the company. But he refused to divulge further details.

The government of Nepal owns 71 per cent of the shares of the company while the Khetan group owns 13.4 per cent. The Birla group of India also owns a small portion of the shares and the general public owns the rest.

However another source at the ministry said Khetan group had proposed that they take over the management of the company and give ten percent of the profits to the government.

There was no response from the Khetan group officials despite several phone calls from The Himalayan Times.

The government is mulling over the Khetan group’s proposal, but is yet undecided. The government considering whether to accept Khetan group’s proposal or sell all of its shares through a bidding process.

The Ministry official, however, said the Khetan group had said it would back out if bids were called because it would have to purchase the shares at a high price if bids were called. This could be too high as they were not sure about the amount of metal that could be extracted from the mine.

According to Bishwo Hari Dhungel, the head of the Nepal Metal Company, the company was set up in 2037 BS but it has never started operations. The government was supposed to build infrastructure like a link road and electricity in the extraction area but this was delayed for decades. In recent years a link road had been built and electricity poles had been erected in the extraction area. But the link road was chronically under funded so it is not of good quality and electricity wires (worth Rs. 30 million) have also been stolen. In total, shareholders have already invested about Rs. 430 million in the project but apart from purchase of some assets used in mining, there is very little else to show for it, according to Dhungel.

Dhungel said studies had shown there was the possibility of extracting 2.4 million tonnes

of metal from places like Suple and Lari while another 600,000 tonnes may be gotten from Sherchuping. The total turnover from this project could be US $ 600 million. But he said this was a highly risky business because the total amount of metal discovered could be much less than estimated.