Tanners in tight corner

Prime Minister's Office (PMO) has asked the authorities concerned to hand over lease deeds on plots in the Savar tannery estate to tanners urgently to help them get bank loans to meet their capital shortage, officials said.

The higher authorities of the government have also instructed Bangladesh Small and Cottage Industries Corporation (BSCIC) to complete the work on the Savar tannery estate project as soon as possible, they added.

The PMO has recently sent a letter to the Ministry of Commerce (MoC), asking it to take required steps for addressing the issue.

A commerce ministry official said the PMO directed the commerce ministry to take effective steps to this end against the backdrop of the slump in rawhide prices during last Eid-ul-Azha.

Some 154 tannery owners have been allocated plots on 200 acres of land at the Savar estate, initiated in 2003. But the construction work on the industrial estate has not yet been completed.

On the other hand, the authorities concerned failed to hand over lease deeds due to bureaucratic complexities, although the tannery owners have repeatedly asked for those.

In May 2019, the government fixed the price of land for the Savar tannery estate at Tk 471 per sq feet.

The price of 200 acres of land is over Tk 4.10 billion which the government can pay at a time and later can collect it from tannery owners in long-term instalments, the PMO recommended in a special report.

When contacted, BSCIC Chairman Md Mostaque Hassan said the government fixed the land price for the tannery estate.

"We hand over lease deeds to the tanners concerned, when they make payments against the land prices as fixed," he added.

A good number of entrepreneurs have already started establishing their tanneries. But they are yet to get their lease deeds.

The tannery owners have been facing a fund crisis for a long time. Most of them failed to take loans from the banks. For this, they cannot pay arrears to rawhide merchants.

Tanners owe money to rawhide merchants dating back to 1990s, but insiders say the bulk of the amount falls due during the period from 2015 through 2019.

When contacted, President of Bangladesh Tanners Association (BTA) Shahin Ahmed said tannery owners already spent about Tk 70.00 billion on relocation of their factories. For this, they do not have enough funds to run their business now.

He mentioned that collateral is needed to take loans from scheduled banks. "We can take fresh loans from banks against lease deeds."

"We will be able to meet capital shortage and import required capital machinery for our factories if we get fresh loan. So, lease deeds are needed immediately," Mr Ahmed explained.

The rawhide merchants faced difficulties with purchasing rawhide during last Eid-ul-Azha for not getting dues from tanners. They (merchants) refused to sell rawhide of sacrificial animals to the tanners, according to the PMO report.

Later, the traders took a decision to sell their rawhide to the tanners following an intervention of the industries and commerce ministries.

The PMO report says construction work started on 124 out of 154 plots. The Central Effluent Treatment Plant (CETP) at the Savar Tannery Industrial City is not fully ready for purifying chemical waste. Besides, construction work of establishing some dumping yards has not yet started.

The project was taken up in 2003. It was supposed to be completed by 2005 at a cost of Tk 1.76 billion. Both the tenure and the cost of the project have been raised several times.

In 2013, the project cost ((including CETP and other jobs) was fixed at Tk 10.79 billion and the deadline for completion June 2016. But the planning ministry later extended the time to June 2017.

Besides, the work order on the CETP had been given in 2012.

Of the fund of Tk 10.79 billion, over Tk 6.42 billion had been kept aside to establish CETP and other waste refinery management plants.

BSCIC awarded work order to a Chinese constructor to build the CETP and dumping yards in April 11, 2012 at a cost of Tk 4.77 billion to complete it within 18 months, the report said.

But the Chinese contractor is yet to complete the construction work on the CETP.

In October 2017, the High Court directed the authorities to complete the construction of all relevant structures, including the CETP at the tannery estate in Savar within four weeks.

The BSCIC chairman claimed that most of the construction work on the CETP was completed. The remaining work might be completed by December.

A BSCIC source said the tanners were not using the CETP properly. They throw all kinds of waste like sand, stones, sacks and other materials into the CETP. As a result, it is not functioning properly, the source said.

When contacted, BTA general secretary M Shakhawat Ullah hailed the government move and mentioned, "We are facing shortage of running capital. We are trying to get bank loans."

"We will be able to overcome fund crisis if the existing problems are addressed," Mr Shakhawat said.

Despite repeated efforts over mobile phone, project director of Savar leather estate GN Paul could not be reached for their comments.

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