Privatization: A beacon of hope for redemption of Udaipur Cement

This article was originally published in on July 25, 2023 by Sindhuj Thapa. Ms. Thapa is a researcher at Samriddhi Foundation. Views expressed in this article are the author’s own, and do not reflect the views of the organization. She can be reached at [email protected]

Udaipur Cement Factory, once a symbol of Nepal’s industrial progress, today stands as a haunting testament to the failures of governance and the pain borne by diligent taxpayers. Established with the aid of the Japanese government, it is now a shadow of its former self, suffocating under the weight of mismanagement, corruption, and dirty politics. As we examine the heart-wrenching consequences of this industry’s loss on the taxpayers of Nepal, we find solace in the beacon of hope that privatization offers.

For decades, Nepal’s taxpayers have unflinchingly offered their hard-earned money to keep the wheels of this cement factory turning year after year, financial statements unveiled the grim reality of losses, and yet the government continued to pour funds into a sinking ship. As a result, crucial public services suffered, schools lacked resources, hospitals struggled, and roads remained unpaved. The sacrifices of ordinary citizens were squandered, their dreams of a prosperous nation turned to dust.

The inefficiencies plaguing the Udaipur Cement Factory are painfully evident in its financial records and operational history. The industry has been incurring huge losses that are only going up for the past five years with net loss of Rs. 142.4 million in fiscal year 2017/2018, Rs. 196.3 million in 2018/19, Rs. 333.6 million in 2019/20, 306.0 million in 2020/2021 and Rs. 5424.4 million in 2021/2022.

Internal strife, fueled by political ambitions, destabilized the industry’s operations. Like any other public enterprise that lacks the profit maximizing incentive in a state-owned enterprise Udaipur Cement is no different. Chairman Keshav Kumar Basnet’s focus on elevating labor organizations for personal gains plunged the factory into chaos. Nepotism overshadowed competence, and the industry plummeted into a state of disarray. As a result, skilled workers lost their jobs, families struggled to make ends meet, and the surrounding communities suffered the consequences. The factory’s inefficiency also extended to its infrastructure and operations. The lack of proper maintenance led to frequent shutdowns and a vicious cycle of stagnation. The industry’s inability to produce cement due to a shortage of coal is a grim reminder of its outdated technology and management’s failure to adapt to modern practices. On top of that Udaipur Cement Industries recently shut down for months incurring a daily loss of Rs 7.3 million per day to taxpayers.

Additionally, financial impropriety and misallocation of funds further exacerbated the factory’s financial woes. The misuse of resources and inflated costs demonstrated the absence of transparency and financial accountability. The hardworking taxpayers, who expected their contributions to fuel progress, were left with nothing but empty promises and shattered trust.

On the other hand, Nepal has exported cement worth around Rs 170 million in the first half of 2023. Hence, amidst this sea of despair, privatization emerges as the beacon of hope that can rekindle the fire of prosperity. Privatizing the Udaipur Cement Factory can bring forth competent management, modern technology, and much-needed capital. By transferring ownership to private entities, the government can unload the burden from taxpayers’ shoulders, enabling them to witness their money being invested wisely in other essential sectors.

A privately-owned industry will strive for efficiency and profitability, focusing on innovation and employee productivity. The expertise of private companies can revitalize the factory, allowing it to reclaim its position as a prominent player in the cement market. As production ramps up and profitability ensues, the factory can contribute to the nation’s economic growth, generating employment opportunities and igniting hope in the hearts of many.

The pain inflicted upon taxpayers by the Udaipur Cement Industries’ inefficiency and mismanagement is a scar that runs deep. As we look ahead, let us embrace privatization as the key that unlocks a future of promise and prosperity. It is time to heal the wounds of the past and breathe life into the dreams of the people. For the sake of the nation and its hard working taxpayers, let us tread the path of privatization with courage and conviction. Only then can we paint a brighter tomorrow for Udaipur Cement and Nepal as a whole.