The steel co­nun­drum

Bhutan Times - - Editorial -

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.

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