Fresh move to revive 3 old state enterprises

The government has initiated a fresh move to help three old state-owned enterprises turn around after its previous attempts largely went in vain.

Karnaphuli Paper Mills Ltd (KPML), Chittagong Chemical Complex Ltd (CCCL), and Khulna Newsprint Mills Ltd (KNML) -- all built in the Pakistan era -- have been causing losses to the government for decades either for closure or lower production.

This prompted Bangladesh Chemical Industries Corporation (BCIC), which runs the factories, to publish three expressions of interest (EoI) notices recently, as it sought applications from international consulting firms to conduct feasibility studies on the three locations.

According to the notices, the corporation plans to build two integrated paper mills based on bamboo and pulpwood on the premises of KMPL and KNML and a chemical complex on the CCCL premises.

Experts, however, expressed concerns about whether the initiative would be successful. Rather, they said the government should form a public enterprise reform commission to decide their fate.

BCIC issued the EoIs for KNML and CCCL in May and for KPML last September.

It received five applications for the feasibility study concerning KNML from companies in the US, China, Finland and Iran, said an official of the corporation.

Nine firms from countries such as France, the US, China and Singapore showed interest to carry out the feasibility study about CCCL.

The corporation hasn't received any application about KPML as of November 3, the closing date of the EoI. "We will extend the deadline," said the official.

BCIC Chairman Shah Md Imdadul Haque said they took the initiative to build four to five factories on the estates.

The corporation plans to set up the factories under joint ventures. "But if we don't find any investor, we will move on our own," he said.

"BCIC is like a sinking ship and we are struggling to survive."

KARNAPHULI PAPER MILLS LTD (KPML)

With five acres of land, the country's largest paper mill, KPML was established in 1953 in Chattogram's Chandraghona. It made a profit within a short time on the back of the availability of raw materials. But after 2001, it fell in the red.

The factory also faced a lot of corruption and irregularities at that time, said a former official, on condition of anonymity. 

In 2008, the government started BMRE (Balancing, Modernisation, Rehabilitation and Expansion) at the factory that continued till 2014. But in a report in 2018, the Implementation Monitoring and Evaluation Division called the BMRE a total waste.

The BMRE was conducted based on a concept prepared in 1996, which was not realistic in 2008, it said.

In 2010, a bleaching tower was set up to improve the quality of papers, but it went out of order due to technical glitches just a week after it was inaugurated. Its condition has remained the same since then. The tower cost the taxpayers Tk 171 crore.

"Currently, our paper mill is operational. However, the production has declined sharply. This factory is quite old, and the equipment don't run smoothly," said KPML Managing Director Bidyut Kumar Biswas.

At its peak, the paper mill used to produce 100 tonnes of paper a day. Now, it has come down to 20-30 tonnes.

The government has to spend around Tk 2 crore per month for the salaries of the officials of KPML and bear other expenses.

CHITTAGONG CHEMICAL COMPLEX LTD (CCCL)

CCCL has been shut since 2002.

According to EoI documents, BCIC wants to set up a new chemical complex having chloralkali and chlorine-related basic chemical compounds on the premises of the complex in Barabkund, Sitakunda.

A former official of CCCL said they had performed BMRE for the complex in 1998 at the cost of Tk 114 crore, which was secured as a loan. But the company could not bear the debt burden, and the amount of revenue loss was increasing.

The government shut the factory in 2002. In 2011, the government moved to revive it and reopened the factory in 2016. But it saw a loss of Tk 36 crore per year.

A committee of BCIC said the company would return to profit if it could manage another Tk 120 crore in investment, but the government did not invest.

Moazzem Hossain, managing director of CCCL, could not be reached for comments.

Khulna Newsprint Mills Ltd (KNML)

KNML, located in Khulna's Khalishpur, started its operation in 1959.

From 1995 to 2002, the newsprint factory incurred a loss of Tk 284 crore, according to a source. The losses compelled the BCIC to close it. It has been closed for around 20 years.

The corporation sent it to the Privatisation Commission in 2005, but the efforts to sell it twice were unsuccessful. It was brought under the industries ministry again in 2008.

At that time, the corporation formed a committee to conduct a feasibility study. The committee recommended an investment of Tk 422 crore to make a turnaround. But the advice has not been implemented.

The government spends Tk 14 lakh every month to pay salaries to about 50 people, including five permanent officials and 30 security guards.

Prof Mostafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said the government should set up a public enterprise reform commission for troubled state-owned enterprises.

The commission will recommend measures whether they should be closed or continued, need BMRE, or run under the private-public partnership.

"The commission should provide an independent advice that should be implemented by the government," he added.