BTMC keen to give 3 closed mills to private hands

State-owned Bangladesh Textile Mills Corporation (BTMC) has taken an initiative to lease out three of its closed mills after a decade of unsuccessful attempts with the public-private partnership (PPP) model to revive the facilities. 

The state-owned corporation has already got the prime minister's approval to lease Valika Woolen Mills in Chattogram, Sylhet Textile Mills and Kurigram Textiles Mills out to the private sector, officials said. 

These three mills have gas, electricity, and water connections, and there are no outstanding utility bills, land development fees, or municipal taxes, they said.

Md Abdur Rauf, secretary of the Ministry of Textiles and Jute, said that the PPP process is a lengthy one and the initiative has not seen much success so far. This is why the BTMC has decided to lease out its three textile units, he said, citing similar experience in the Bangladesh Jute Mills Corporation (BJMC)'s PPP attempts for state-owned jute mills.

Abdur Rauf said if these three textile mills can be successfully leased out, others listed for PPP model will also be brought under the lease method.

In 2014, Prime Minister Sheikh Hasina visited the Ministry of Textiles and Jute and directed to hand over the closed mills of BTMC to the private sector on PPP model. Accordingly, the ministry and BTMC jointly prepared a list of 16 mills. Later in the same year, the Cabinet Committee on Economic Affairs also approved the operation of the 16 mills on the PPP model. But in the last one decade there is no significant progress in this regard. 

As per the conditions set for the leasing scheme, the private owners will have to use these mills only for the production of textile goods. The lease term will be 30 years with option for renewal. The lessee will decide whether they will use the existing equipment or install new machines. 

Solar parks should be installed on the roofs of factories and godown buildings of the mill, with ownership or possession of the mill being in favour of BTMC.

BTMC and lessee will jointly inventory the mill before handover and lease takers can operate the mills in their own name. 

BTMC Director (Commercial) Howlader Md Rokibul Bari told The Business Standard that a delegation of BTMC visited Sylhet on Saturday regarding leasing of these mills to the private sector. The leasing of the mills was discussed with the Sylhet chamber and other businessmen there. Similarly, the team will visit Chattogram and Kurigram. Later, the campaign will be conducted at national and international level.

According to BTMC sources, only Kaderia Textile Mills located at Tongi in Gazipur has been handed over to the private sector on PPP model. Ahmed Bawani Mills is in process of transfer. Apart from this, tender evaluation of RR Textile Mills of Sitakunda, Rajshahi Textile Mills is going on. Calling for tenders for commissioning Dost Textile Mills of Feni and Magura Textile Mills on PPP model is in progress. No action could be taken regarding the rest of the mills.

Terming the PPP process quite slow Rokibul Bari said it is expected that more mills will be handed over to the private sector soon.

BTMC Chief Operating Officer Nurul Alam told TBS that the PPP method has some limitations. One of these is that interested business groups want to use mill land and other assets as collateral for bank loans.

Experts believe that this situation has arisen due to inefficiency and taking initiatives without adequate planning by government institutions. They say taking such initiatives was not prudent after knowing that the PPP model could not attract special attention in Bangladesh.

Ahsan H Mansoor, executive director of the Policy Research Institute, a private research organisation, told TBS that the lease method is better than the PPP model. The lease term should be longer to provide convenience for investors to work in a favourable environment because apart from the premises of these mills, there is nothing left in terms of buildings, machinery, or workers, and everything needs to be started anew. As a result, the investor has to be given sufficient time so that it can make a profit by investing heavily. But the government must take care of employment.

The state-owned BTMC has virtually reduced to a custodian of closed mills with most of its 25 mills not functioning properly and a significant number of mills being closed for almost a decade. 

Due to the closure of mills, BTMC generates no revenue from mills; however, some income is derived from the permanent lease of certain mill buildings and other properties kept in bank custody, with BTMC earning a total revenue of Tk28.69 crore in fiscal year 2022-23, incurring expenses of Tk46.23 crore, resulting in a net loss of Tk16.65 crore. Similar projections have been made for the upcoming fiscal year, and there are also substantial outstanding amounts in utility bills, land development taxes, and municipal taxes.