Five pvt firms picked to run five closed jute mills

After a more-than-six-month privatisation process, the Bangladesh Jute Mills Corporation (BJMC) has zeroed in on five private companies to lease out five state-owned jute mills that have been shut since last year.

The five private entities are Unitex Group, Saad Musa Group, Mimu Jute Mills, Bay Group with a foreign venture, and the UK's Jute Republic.

The leased-out mills are Hafiz Jute Mills and KFD Jute Mills in Chattogram zone, Bangladesh Jute Mills and Jatio Jute Mills in Dhaka zone and Crescent Jute Mills in Khulna zone.

Of them, KFD Jute Mills has three units – Karnafuli Jute Mills, Furat Karnafuli Carpet Factory, and Diversified Decorative Fabrics.

The lease contract will be for five to 20 years, but it can be extended further. The firms will be allowed to use existing machinery, land and other capacities of the mills only to produce jute and jute goods. 

Under the leasing terms, the firms will not be able to mortgage the properties for availing bank loans.  

"After getting approval from the government, we sent the notification of the award to the selected firms. These firms have to pay 24 months' rent to sign the final deal," Md Abdur Rouf, chairman of the BJMC, told The Business Standard.

"They will have to pay the rent within one and a half months to sign the deal," Abdur Rouf added.

Md Mohsin, managing director and chairman of Saad Musa Group, told TBS, "We have decided to produce jute and jute goods for local and domestic markets. After surveying the mills, we will be able to mention how much investment will be required to resume production."

Mohsin said the Saad Musa Group has prior experience in running jute mills, and now there are many options available to make jute products in a diversified manner.

"Since our old foreign clients showed growing interest in environment-friendly jute-made items, we took the mills on lease," he noted.  

BJMC officials said proposals and quotations against three mills – Jatio Jute Mills, Crescent Jute Mills and Bangladesh Jute Mills – were more than the base price, while the quotations for the remaining two units were below the BJMC expectation.

Despite the lower price quotations, the corporation officials opted to lease out the two mills.

In the face of mounting losses for years, the government last year shut down 25 state-owned jute mills, bidding farewell to around 25,000 workers.  

Subsequently, the government came up with the privatisation plan as per the Industrial Enterprises Nationalisation Act-2018.

The BJMC in April this year floated a tender to lease out 17 of the closed mills.

In response, 24 firms, including two Indian and one British, submitted 59 proposals against 14 mills. Three mills in Khulna did not get any proposals from private companies.

Later, the BJMC tender evaluation committee asked for a submission of final proposals from the shortlisted firms. Subsequently, the committee finalised 25 proposals against 12 mills as the shortlisted companies did not place any proposals for two jute mills.   

The 25 proposals were sent to the textiles and jute ministry for final selection.     

Now with the fate of the five mills finalised, the corporation says the government will decide what will happen about the remaining 12 jute units that were up in the tender.