Due to the failure of Shakti Minerals, which is located within the Bhairahawa Special Economic Zone (SEZ), to meet its export quota, the company has run into difficulty with local authorities.
According to the SEZ Act, factories located within the SEZ are required to export at least 60% of their total output in order to remain in business. Originally, the threshold was 75 percent; however, as a result of a modification to the law, the demand was reduced to 50 percent in 2019.
Shakti Minerals, which manufactures limestone grit and powder used in the production of chicken feed, was barred from selling its products in the local market last Tuesday by SEZ authorities because it had failed to meet its export quota.
Entrepreneurs situated in the SEZ claimed that they had fallen behind schedule as a result of the Covid-19 outbreak, which had stopped them from fulfilling their regular production and export goals.
As of Wednesday, Shakti Minerals, which was the first firm to be created in the SEZ with an investment of Rs400 million, would no longer be able to export its products to the country of origin.
According to reports, the plant only accomplished 6.5 percent of its export quota in the first four months of the current fiscal year, despite the fact that the firm says that exports accounted for 17 percent of total exports.
Deepak Jha, the proprietor of Shakti Minerals, stated that the company has been experiencing difficulties for the past two years as a result of the Covid-19 epidemic, which has resulted in lower output.
According to him, “sales of our products in the domestic market were abruptly and without prior notice discontinued on the grounds that 60 percent of the manufactured goods were not exported.”
“We have been afflicted with the coronavirus, and now the officials in the Special Economic Zone are making life tough for us.” “They’re not making things easy for us,” Jha expressed frustration.
According to the factory, during the first four months of the current fiscal year, Shakti Minerals transported items worth Rs1.76 million to India and sold goods for Rs25.3 million in the domestic market.
Mr. Jha asserted that the Special Economic Zone was not delivering on its promises to provide the facilities it had promised.
Built in 2003, the much-hyped Bhairahawa Special Economic Zone (SEZ) in south central Nepal was officially opened in November 2014, a full 11 years after construction began, by then deputy prime minister and home minister Bam Dev Gautam and industry minister Mahesh Basnet, who were also then deputy prime minister and home minister at the time.
The plant was officially opened for the second time in 2017 by Nabindra Raj Joshi, then the industry minister of India.
Officials at the special economic zone have stated that development will be completed by the end of this fiscal year, which concludes in mid-July. This is nearly two decades after the zone was established.
Jha stated that the SEZ Act does not provide for the provision of electricity, water, telephone, street lights, a customs facility, a one-window system, or any of the other amenities that are required.
He asserted that the government had failed to deliver the essential infrastructure and infrastructure-related infrastructure. In recent days, the company’s daily exports have averaged around Rs200,000, and its daily domestic sales have averaged around Rs400,000.
In recent days, according to the company, exports have seen a significant increase.
According to Jiban Poudel, chief of the Bhairahawa Special Economic Zone, Shakti Minerals has been barred from selling and distributing its products in the local market since the company has not met its export quota as required by law.
According to him, “the factory’s exports should be increased,” and that the factory should operate in accordance with the purposes for which it was established.
SEZ aims call for the provision of a one-stop service that includes everything from registration to manufacturing and exporting goods. However, according to industry entrepreneurs, that is a pipe dream for the businesses operating within the SEZ.
A small number of industrial plots have been sold in the export-oriented enclave, and the estate remains unfinished despite the fact that numerous ministers have come and gone over the course of these years.
A total of 69 industrial plots ranging in size from 1,400 to 3,700 square metres are located within the special zone in Bhairahawa, which is stretched across 52 bighas.
Although the SEZ Act was amended two years ago, the regulations have not been updated to reflect the changes. The process of modifying the regulations is still in progress, and it is unclear what types of factories will be permitted to operate within the zone until the amendments are finished and implemented.
As a result, several businesses have decided to cancel their agreements to operate facilities because they claim that even the most basic infrastructure is not available.
According to the SEZ’s administration, just 22 of the 69 industrial plots that were allocated have been utilized. Although agreements to establish 22-23 factories have been inked, no work has begun on the buildings. No one has expressed interest in purchasing the remaining parcels.
According to businesses, there have also been complaints that the infrastructure has become overrun with weeds and that people are afraid to go about the desolate-looking SEZ even during the daytime.
For the past seven years, a significant portion of the budget has been allocated to maintenance expenses. There has been no halt to the tradition of ministers visiting the premises on an annual basis and making high promises.