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Nepalese industries ran at just 39 pct of capacity due to blockade: study

Xinhua, June 9, 2016 Adjust font size:

Nepal's major industries operated at an average of just 39.5 percent of their production capacity during the first half of the 2015-16 fiscal year when the Himalayan nation witnessed political unrest and blockade in its southern border points, the central bank said.

During the four-and-half-month blockade that ended in early February, Nepal faced acute shortage of fuel and raw materials to operate the industries. Most of the Nepalese industries are dependent on imported raw materials.

The latest study report, released by Nepal Ratra Bank (NRB), stated that capacity utilization of major industries fell by 13.17 percentage point in the first half of the current fiscal year which began in July 2015.

The study was carried out accommodating the economic activities of the period from mid-July 2015 to mid-January 2016.

Earlier study conducted by the central bank covering the period from mid-January to mid-July 2015, had found that industries were running at 52.67 percent of their production capacity. As Nepal has been facing prolonged power cuts, its industries cannot operate at their full capacity despite having demands for their products in the market.

The study has covered the production and capacity utilization of major 23 types of industries operating in eight major industrial cities and surrounding areas, including 47 districts out of country's 75 districts, according to NRB.

According to the latest study report, industries operated at the capacity of 2.9 percent to 82.19 percent. Sugar factories saw the lowest capacity utilization while noodle factories performed highest capacity utilization. However, most of the industries operated below 50 percent of their capacity, according to the study.

Nara Bahadur Thapa, chief of research department of the NRB, said although Nepalese industries were facing chronic problem of energy crisis and labor problems among others, their impact turned to be insignificant compared to the impact of the blockade.

"Industries used to use fuel to run industries even during the load shedding but the blockade created the shortage of fuel affecting industries hard," he told Xinhua on Thursday.

The Nepalese government has recently projected that the country's industrial sector would suffer a negative growth of 6.3 percent for the first time in last seven years as a result of the blockade.

Industrialists said there was not environment for operating industries during the blockade. "We had to reduce the working hours as there was no work," said Tara Prasad Pokharel, managing director of Agni Cement Industry.

The cement industries utilized just 33 percent of their capacity in the first half of the fiscal year, according to the study. Endit