Khulna Newsprint Mills: Shut 20 years ago, yet spent Tk 33cr

For many in their 30s and above, the word newsprint occupies a good part of memories of their schooldays.

Its thinness-induced fragility, the risk of damage for its high fluid absorption capacity and the need for extra care to prevent it from falling apart remain still fresh in their memories.

The only comparative advantage was the price gap with offset or printing paper, which prompted many budget-conscious, low-income parents to buy newsprint for their children.

Today, however, the availability of newsprint has become rare. The mill that had been making the paper remains shut for two decades.

Only a handful of security guards and some officials of Bangladesh Chemical Industries Corporation (BCIC) look after the property of Khulna Newsprint Mills, where once 2,500 workers were employed.

"When I joined here after the Liberation War, the mill was full of labourers and staff. Production ran 24 hours a day," said Md Asaduzzaman, serving as a security guard since the '80s.

It was so busy with activities that time flew by and it was hard to deduce whether it was day or night, he said. But now the silence was deafening, even scary at night, he added.

Asaduzzaman was right.

Full of bushes all around, Khulna Newsprint Mills now initially looks like a ghost town. Giant machinery lies scattered inside the premises while buildings are losing their strengths.

Giant boilers where the raw materials were once boiled have been left out of order for a lack of maintenance.

And the bank of the Bhairab river southwest of Khulna city, where the mill is located, also does not see movement of vessels coming from the Sundarbans with raw materials.

The crane used to unload goods from vessels is rusting away. And the walkways on the mill premises, which once was abuzz with busy workers and the sounds of their footsteps, have all gone silent.

The mill was established on 88.68acres of land in 1957 thanks to the availability of Gewa wood and labourers in surrounding districts. It began commercial production in 1959.

At that time, the mill had an annual production capacity of 48,000 tonnes.

The mill authorities said the venture had been profitable for a long time. It began to suffer losses since 1992.

In fiscal year (FY) 1995-96, many private sector businesspeople started importing paper from abroad following the withdrawal of a 75 per cent import duty on newsprint.

As a result, demand for the mill's less bright, 52 grammes per square feet newsprint decreased.

In addition, the mill's losses continued to increase due to the government setting paper prices without adjusting to the cost of production, a crisis of working capital and raw materials and increase in furnace oil prices.

Between 1995 and 2002, the mill incurred a loss of Tk 284 crore, according to mill sources.

Production was stopped on November 30, 2002 due to continued losses and capital shortages, leaving about 3,000 officers and workers without a job.

However in the following 20 years or so, at least Tk 33 crore was spent for paying salaries of around 50 people, including five permanent officers and 30 security guards, who still remain employed; electricity bills, water pump and guest house maintenance and office expenses.

During a recent visit to the mill, a notice dated 2002 was seen still hanging on a bulletin board.

The production and marketing department issued the notice, mentioning that they had halted production due to problems in the marketing process.

It seems hopes were still flickering for the mill to resume operations sometime in the near future but the moment never came about.

Officials say the mill's machineries were getting damaged due to negligence and carelessness. There are also allegations that some machineries were also stolen.

A security guard said burglars on engine boats arrive at night over the Bhairab river and grab parts and equipment.

"Guards cannot prevent them as they are well equipped with sharp weapons and guns," he added.

Khokon Chandra Das, the mill's managing director, denies equipment has been stolen. "It is not true," he said.

BANK OWED TK 400CR

While the mill was in operation, a loan of Tk 57 crore was taken from the corporate branch of Sonali Bank in 1997 by mortgaging the whole piece of land the mill stood onto procure raw materials.

The debt stood at Tk 404.87 crore on June 30, 2021, including unrealised interest, after only Tk 56 crore being paid recently, according to an official of Sonali Bank's Khulna corporate branch.

The mill is the bank's "biggest defaulter", he said.

Despite the mortgage, the BCIC sold some 50 acres of the land to North-West Power Generation Company, which is constructing a power plant on it, for Tk 586 crore, according to a BCIC source.

Seeking anonymity, a senior official of Sonali Bank's Khulna corporate branch told The Daily Star, "We have not taken any action against the mill authorities because the power plant is under the priority project of the prime minister."

According to the mill authorities, the mill was listed with a privatisation commission on February 8, 2005 for denationalisation. They invited tenders for sale of the factory twice but the initiative fell through.

They said the mill's ownership was handed back to the industries ministry in August 2008.

A committee was formed the following year to reopen the mill and it conducted technical surveys.

The committee proposed to install three offset or printing paper production plants at a cost of Tk 422 crore. The proposal was not accepted by the government, officials said.

Then, in 2014, the Planning Commissionsent a proposal to the Prime Minister's Office to set up an industrial park there. There has been no progress on this regard.

The BCIC proposed a Tk 855 crore project in FY 2016-17 to build a new factory. The bid was rejected too.

NEW FACTORY PLANS

Now the BCIC plans to set up a new factory on the premises.

It will verify the technical and financial feasibility of the plan within the next four months through a consulting firm before starting the implementation work.

The state-run corporation has recently conducted an internal survey.

An official related to the survey said the land was suitable for setting up three types of industries – a paper or starch mill or an active pharmaceutical ingredient park.

Recently, a letter signed by Shekhar Bhattacharjee, general manager of the BCIC, asked them to prepare five types of reports, comprising digital surveys and soil and water analysis, to take up the new project.

Contacted, Khokon Chandra Das, the mill's managing director, said the factory failed at many issues including keeping pace with time.

"We declared the out-of-work machineries as scrap, and preparing to sell those. On the other hand, the plans to set up a new factory are undergoing," he said.

Dilwar Hossain, a resident of a neighbourhood adjacent to the mill, said successive governments made promises of reopening the mill with various schemes in the past.

"None came true. If the mill is commissioned, the people of the area will benefit directly and indirectly," he said.

WHAT EXPERTS SAY

Economist Zaid Bakht suggested exploring public-private partnerships (PPP) to make better use of the state mills.

He said state mills should be permanently shut down if they have no use or bring no benefit to the state.

"We have the bitter experience regarding the PPP, but if we could follow the proper process, it is better to re-launch the mills under the PPP," he said.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said the mill should first be audited by an international audit firm to determine its assets and liabilities.

He said since the place was ready and has facilities, if the government wants, they can give the place to Bangladesh Economic Zones Authority for setting up an industrial enclave.

However, it should be kept in mind that no entrepreneur will agree to set up an industry on this land again if there is a large bank debt of behind this land, added Moazzem.

If reopened through modernisation, the mill could play an important role in the country's paper industry, said Sheikh Ashrafuzzaman, secretary general of Greater Khulna Unnayan Sangram Samannay Committee.

He demanded immediate commissioning of the mill.