The steel conundrum
In what would be called a repercussion of the increase in the domestic power tariff the two steel factories in Pasakha shut down since January 2014. In a letter to the Association of Bhutan Industries (ABU) they said that due to the unavailability of business due to increase in power tariff they are shutting down.
The Bhutan Electricity Authority is mandated to revise the domestic tariff since October 2013 in cycle wise .The second cycle of power tariff revision took place in July this year and has revised the rate of energy charge from Nu. 1.98 for medium voltage (MV ) category to Nu.2.19 The first cycle of power revision took place in October 2013.
The shutdowns of these companies have left so many questions unanswered and time will only determined the future of others. Or heart goes to the employees have been laid off adding to the already high rate of unemployment in country. The investors have gone through a terrible nightmare just figuring out what went wrong, where and how. The hard work they have put ion have gone down the drain and this is the reality.
In meet press last Friday Lyonchen Tshering Tobgay said the two industries solely blaming the new power tariff for their shutdown cannot be proven as their factories was shut down from January 2014 whereas the new power tariff came into effect from last month. Lyonchen pointed a host of reasons for the shut down including the management, marketing or financing. These industries must be honest and should reveal the real reason for the closure.
The sole reason for the establishing of the steel industries in Bhutan was to take advantage of the cheap and clean power. These industries have been exporting most of their finished products to India and have been earning Indian Rupee. The steel factories in Bhutan have been manufacturing TMT bars, billets, ingots and structural steel sold in India.
The Indian steel industry was a sunshine industry, fuelled by a rapid rise in infrastructure, spending and middle class family. The people desired to own a fridge, car and TV increase overnight. Due to this Bhutanese private sector too jumped in to make some money. However the global financial crises in 2008, the slow growth of the Indian economy and the freezing of the loans by the commercial banks in Bhutan, hit the steel industries the worst.
Whatever said and done the government has given the assurance that it will sit with the Bhutan Electricity Authority to discuss about the new tariff and see what can be done. With so much assurance from the government, it is time to be honest and reveal the real issues as we all live a small close society.