Cash-rich Army to revive Hetauda Textile Factory

Prime Minister Pushpa Kamal Dahal held discussions with the Nepali Army (NA) on Wednesday to explore the revival of the Hetauda Textile Factory. During a high-level meeting at the Office of the Prime Minister and Council of Ministers, the Army briefed the prime minister on the feasibility study related to resuming factory operations.

The feasibility study aligns with the government’s commitment, outlined in its policies and programs for the current fiscal year, to investigate options for reviving closed industries. The textile factory, initially established in 1975 with financial and technical support from the Chinese government and investment from the Nepal government, ceased production in 2000. It was formally closed by the royal government in 2003, but still retains ownership of 166 ropanis of land.

According to the study report, various factors contributed to the factory’s closure, including inadequate market management, insufficient technological advancements, power outages, overstaffing, and a lack of managerial efficiency.

The report highlights that the Army Welfare Fund has a sufficient budget to operate the industry, and most required raw materials are available within the country. The revived factory, as per the report, is expected to face no market-related challenges, with the Nepali Army potentially becoming a major consumer.

Reviving the industry, as suggested by the report, could significantly contribute to national industrial development, boost the gross domestic product, and convey a positive message to the global market by enhancing national sufficiency and creating job opportunities.

The study’s task force has proposed an outline for re-operation, including a three-year work plan with a target of manufacturing approximately 2.6m meters of cloth. A policy decision is expected in the current fiscal year, and the industry would be transferred to the NA, which will prepare a detailed project report, select, and purchase new machinery.

The proposed outline envisions starting test production in the upcoming fiscal year after completing infrastructure construction and acquiring machinery and equipment. The estimated cost for re-operating the industry is Rs 1.93bn, with an annual operation cost of Rs 780m. The task force predicts that the industry will turn profitable, covering the investment cost, after nine years. The report also calls for government policy and legal support for the re-operation of the industry.

“The Nepali Army has carried out a sound study. I will hold discussions on this at the political level and may form a small team at the government level for further study. We will make a concrete decision in a Council of Ministers meeting thereafter,” Prime Minister Dahal said. He said that the past privatization of government-owned industries had led to decreased productivity and job opportunities, emphasizing the need for careful consideration in decision-making.