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March 2017 Cover Story

Published on: 2017-03-26 10:47:22     2000 times read    1  Comments

“The capacity utilisation of the Nepali iron and steel industries can be 80-90 percent”

Anil Kumar Rungta, Director Jagadamba Enterprises Pvt LtdAnil Kumar Rungta
Director
Jagadamba Enterprises
Pvt Ltd

What are the reasons behind the flourishing Nepali iron and steel industry despite the various odds?
The industrialisation of Nepal gained momentum after the political changes in 1990. The liberal and open market policies helped the industries to grow. Nevertheless, the Maoist insurgency put a major roadblock in the pace of the country’s industrialisation. New industries did not come and the existing ones did not expand their capacities. The situation improved after the first CA elections in 2008 and the successive governments focused on infrastructure development. Foreign aid was spent on the construction of physical infrastructures. It led to the rise in the demand of iron and steel rods and other related products. Meanwhile, the rising inflow of remittances also had a cyclic effect on the market of iron and steel rods.  The increase in production by old industries with more demand can bring new investment. Over the last 5-6 years, the industries have enhanced their production capacity and new investments have increased in this sector. These are some positive aspects among the number of problems in the sector. 

How much is the total demand for iron and steel in Nepal? Are Nepali industries capable of meeting the demand?
It depends on the pace of the country’s development. The per capita annual consumption of iron and steel products in advanced economies is 100 kg. In China, it is 200 kg, whereas in developing countries it is 50-60 kg. In India, the per capita consumption of iron and steel products is 60 kg. However, it is hardly 30 kg in Nepal. Our per capita consumption should be 40-50 kg at present. 

Nevertheless, the consumption may increase as hilly regions occupy much areas of Nepal. On this basis, the demand for iron and steel products in our country is around one million metric tonnes annually. It is increasing by 10 percent yearly. And, the domestic industries are fully capable of meeting the demand. 

But, the latest data shows imports increasing in Nepal?
The demand was high due to the devastating earthquake of 2015.  It was the result of an unusual situation. During the period, development work and the construction of houses were stopped. After the situation became normal, the backlog gathered pace and new projects were also initiated. The demand for iron and steel construction materials reached 200,000 metric tonnes per month back then. It actually was a demand bubble. Long hours of power cuts were also there during that time severely affecting the capacity utilisation of Nepali iron and steel plants. The increment in imports was due to the fact that the domestic industries could not meet the demand. Now the demand has come to the actual level, and domestic manufacturers have been supplying the market to meet the demand. 

How will the expected pace of reconstruction impact the iron and steel market?
Houses in the hilly regions were mostly constructed from bricks, mud and wood till a few years ago. However, people in these areas nowadays build houses using concrete and iron bars. Some earthquake affected people have reconstructed their homes with modern construction materials. However, the reconstruction of government buildings, historical monuments and religious structures destroyed or damaged by the earthquake is yet to start. Similarly, the development of unified housing in the quake affected districts has also not begun. Hence, the demand for iron and steel bars and other construction materials from those areas is yet to come. The reconstruction drive will bring positive results to the domestic iron and steel industry. 

What is the rate of capacity utilisation in the iron and steel industry?
Domestic industries utilise no more than 60-65 percent. Nevertheless, it can be 80-90 percent within a couple of years if the problems are resolved through policy. 

What problems are domestic producers facing? 
Firstly, the inadequate supply of electricity. Though the situation has improved in the recent months, it is not sufficient for iron and steel industries. There should be a continuous and quality supply of electricity. Secondly, there is the manpower problem. The industries are facing problems due to the lack of a skilled workforce. Meanwhile, various obstructions also exist in the transportation of raw materials and finished products. There are technical problems at ports and railways. The existing roads are far too inadequate to easily transport our finished products from one part of the country to another. The government needs to find long-term solutions to these problems.

How has the seemingly never ending political instability affected your industry and the construction market?
The political instability has led to uncertainty over policy and guidelines. Due to the instability, the capital expenditure of the government is low, affecting the market directly. Similarly, the industries have been facing problems such as political interference and frequently occurring strikes. Though the recently amended Industrial Enterprises Act has made an attempt to resolve such issues, nonetheless, the Labour Act also needs to include these things. The iron and steel industry is among the largest sectors in terms of investment in the country which is integrally connected to overall development and livelihood. 

How has the improvement in the supply of electricity over the past few months helped the industries?
It has had some positive impacts in the production side and the overall market of iron and steel rods. The inflation rate has been significantly low compared to last year. It has helped the producers to lower the cost of production which ultimately reflects in the decreasing price of products. 

Iron and steel industry is among the export-oriented sectors in Nepal. How can we reap more benefit from exports?
Export is the foundation and the engine of any strong economy. Exporting should be our central objective economically. We are positioned inbetween the market opportunities of India and China. We can take huge benefits from the policy provisions of our two neighbours. We need to have proper policy arrangements to exploit this opportunity.  

But most industrialists say that exporting is difficult due to the high cost of production?
It is not true. We should remove the mentality that exporting is in any way burdensome. My industry has been exporting pipes to India for a long time by importing the raw materials from there. We have a specific market and identity and we are well established in the Indian market. Actually, exports are possible if we move ahead targeting specific consumers and markets. 

What opportunities will be there for Nepali producers if the government removes VAT and customs duty subsidy for large projects on the import of iron and steel rods?
This facility started at a time when Nepal was not self-sufficient in iron and steel rods. It was intended to speed up the country’s development. Now, as we have become self-sufficient, the VAT and duty subsidies on importing iron rods by the large infrastructure projects are not necessary. Nepali industries are capable of producing all types of essential construction materials for such projects. The removal of the subsidies is important for the market expansion of domestic industries. 

 

“Certain Nepali industries can even produce 36 mm and 40 mm iron rods”​

Shahil Agrawal, President, Nepal Steel Rolling Mills Association (NSRMA)  MD, Shanker GroupShahil Agrawal
President, Nepal Steel Rolling Mills Association (NSRMA) 
MD, Shanker Group

The Nepali iron and steel industry has been thriving despite various problems. What are the factors driving this healthy growth? 
After the 2015 earthquake and the ensuing border blockade, the demand has definitely increased. The market went down for six to eight months after the earthquake. Work from building homes to construction of other infrastructural projects at that time stopped. The demand now has increased as the demand of that time too has accumulated. Similarly, the constitution making process has ended and the development budget of the country has also increased. The positivity in the market can be seen as investment has increased in hydropower as well as in the development of infrastructure. Likewise, the loan subsidy in the housing sector has also helped in the growth of the business.

How have the iron and steel industries evolved over the years in terms of technology and new products?
There are two types of iron and steel products in the market. One is flat products and the other is long products. Construction-related products come under long products such as re-bar and TMT rods. Besides that, wire products such as nails, galvanised wires are also produced under long products. Manufacturing equipment has been changing from time to time. TOR steel of 415 grades was widely used in Nepal some years ago, however, these days 500 grade TMT rods are being used which is manufactured through water pressure and is thermo-mechanically treated. 

After the earthquake, some companies like Jagadamba Steels have produced Rhino D with higher ductile quality. Being in an earthquake prone zone, we are producing better quality steel. I think better quality steel will come in the Nepali market. Meanwhile, in flat products, flat sheets such as corrugated sheet was highly used in Nepal. Besides that, HR sheets used in fabrication have come up with coloured sheets and this was possible due to new technology. I have not seen huge technological changes. 

What is the annual demand for iron and steel in the country? How much is met through domestic supply and through imports?
The demand for iron and steel in the country is approximately 1.3 to 1.4 million tonnes annually. Similarly, if we separate flat products and long products, the demand for long products is almost 900,000 tonnes. The demand for flat products is approximately of 400,000 tonnes and 100,000 tonnes for others. 

Almost 90 to 95 percent of raw materials are imported from India and other third countries, however, the finished products are being manufactured in Nepal. We are able to fulfill the domestic demand.     

How has the post-quake reconstruction drive aided the domestic iron and steel industry? How much has the demand increased after the 2015 earthquake?
The government commitment on infrastructure and the increase in budget size has helped to increase the demand. The rebuilding process in the housing sector is also raising the demand. Similarly, the financial support from banks for the construction of individual homes after the earthquake has also increased the demand.  

Before the earthquake, the demand for re-bar was approximately 50,000 tonnes per month and now it has reached 80,000 tonnes per month. There was a demand for 25,000 tonnes of flat products per month before the earthquake, which has reached 35,000 tonnes. An almost 33 percent growth in demand has been seen after the earthquake and the Terai unrest. However, it is hard to determine how much the actual growth and recovery is of that period.     

How much is the rate of capacity utilisation in this industry on an average in your estimation?
According to the availability of power supply, the industry is running at approximately 60 to 75 percent capacity at present.

What factors are hindering Nepali iron and steel industries from operating at their full capacities?
At present, the power crisis is the major hindrance for Nepali iron and steel industries. 

How have the difficulties eased for the iron and steel industry with the recent ease in the electricity supply?  
Definitely, the situation has improved now than before, but our industries are still facing eight to nine hours of power cuts. However, the ease in the power supply has improved productivity somewhat.

It’s said that Nepal has become self-sufficient in iron rods. However, the recent import data shows a different picture. Why has there been the sharp increase in the import of iron and steel materials?
As I already mentioned above, 90 to 95 percent raw materials are being imported. We lack iron ore mines in the country. Similarly, basic raw materials such as billet, wire rods, HR sheets, CR sheets are being imported from India and third countries and it is going to continue in the long run as well. Until we utilise our own iron ore mines, which are also in limited numbers, we need to import raw materials. For now, we use the raw materials to produce finished products here.       

Iron and steel products have become top exportable items of Nepal in recent years. How can we further tap the export potential? 
There are no large export numbers. We are exporting very few numbers of corrugated sheets and pipes. Nevertheless, if the government supplied ample amount of power at affordable rates in the upcoming days, we can certainly increase our exports.   

What are the major challenges being faced by the iron and steel industry? 
One of the biggest challenges is power supply and the next is its cost. In Bhutan, the power is supplied to industries approximately at the rate of rupees two per unit whereas here, the industries are being charged Rs nine to ten per unit and they are again going to increase the rates. 

So, in this situation, we cannot think of exporting our products due to such high costs. That is why we need power at an affordable price so that we can increase our export. Likewise, 60 to 70 percent of raw materials come via the Raxaul border point in India. We have two sidings at the Raxaul border, one on the Indian side that comes via trains and the next is the dry port in Nepal. The capacity increment of both sidings is the need of the hour.  

The construction of large hydropower and other infrastructure projects require iron rods higher than 32 mm which is not produced in Nepal. Domestic producers say that they have the capacity to produce such iron rods.  What is the situation in this regard?
We are producing and selling 32 mm iron rods in Nepal. Certain industries in our country have the capacity to even produce 36 mm and 40 mm iron rods. The mega projects of the country in which the government has provided subsidies are however importing construction goods from abroad. They are importing them because of the duty free facilities.    

What opportunities will the Nepali iron industries have if the VAT subsidy on the import of iron rods is removed?
If we are provided with the same facility, then we also can supply our products to the projects. When the VAT subsidy is removed, the demand for our products will increase. 

There is also some lobbying going on to stop the entry of new producers in the iron and steel industry as the current market players cite reasons such as the production will exceed the demand, thereby making the market unstable. Can’t there be an adoption of various ways to make the market competition fair rather than stopping the entry of new producers?
I have not seen anything that could stop new producers coming into the market and that is not possible as well. Any interested iron and steel producing company can get a manufacturing license. There is no bar on opening new iron and steel industries. However, it can be said that it will be hard to sell the product of existing companies with the existing production capacity. So, new competitors should come up with a long-term vision. 

 

“We must first reduce the cost of production to compete with the Indian products”​

Anuj Keyal, Director Narayani Strips Pvt LtdAnuj Keyal
Director
Narayani Strips Pvt Ltd

What are the reasons behind the flourishing iron and steel industries in Nepal despite the various problems?
Entrepreneurship is a line of work where you have to keep on working under any difficult situation.  Due to this, industrialists are still investing in the hope that the future will be better. The industrialists are optimistic about the future and believe that the problems related to the steel industry will be addressed. As Nepal is in a developing stage, we also think that this country has a lot of possibilities and opportunities in terms of its industries. Due to these reasons, we have been investing in iron and steel industries despite the difficulties.  Iron and steel rods are essential in all areas of development work. The increase in construction also sharply increases the demand for iron and steel rods and add to this, the possibility of political stability and improvement in the industrial environment, then you have all the factors leading to the rise in new investments in the iron and steel industry. Despite the present difficult situation, we are positive that it will change in the future. 

How do you see the competition seen lately in new technology and production?
Competition is indispensable in a free market. So, we have no option other than to maintain quality and minimise costs to prove our potential in the market. Similarly, with the new demands we have to focus on product diversification. Innovative technology is essential to meet all these demands. The new technology helps in maintaining the quality and increases production. The cost of production decreases automatically with the increase in production. Now, we have enough new technology in this sector. By adopting the new technology the steel and iron industries have been playing a positive role in the economy. 

You have been manufacturing iron and steel for a long time. Are there any new plans?
Keyal Group has been manufacturing construction materials for the last two decades such as iron rods, pipes and cement. At present, we are preparing to produce coloured and colourless corrugated iron sheets using the latest technology.  We are working rapidly and plan to start commercial production after two months. Our products are of good quality and we hope to win our consumer's trust with these new products. Similarly, we have also started an advanced plant for iron rod production.

How has post-quake reconstruction impacted the domestic iron and steel industries? How has been the demand?
Reconstruction work after the earthquake has definitely increased the demand for iron and steel up to a certain level. The pressure to produce more was felt in the initial days. However, the reconstruction process went very slowly. Even the relief materials have not been distributed to the victims properly and the renovation process of the damaged heritages, government offices is going on at a very slow pace. Though reconstruction is an opportunity for domestic iron and steel industries to prosper, things are not going as expected. Presently, the capital expenditure of the government is too low. According to the statistics, only 11 percent of the budget has been spent in the initial six months of the fiscal year. Due to this, the demand for iron and steel has not been as expected. 

In you estimation, what is the production capacity of the doestic industries?
At present, the average capacity of iron and steel industry is 60-70 percent. However, there is the lack of proper infrastructures, and the government is not any paying attention to solve these problems. The industries can reach their potential capacity if the problems related to production and market expansion are resolved. 

What are the reasons for these industries not operating at full capacity?
There are lots of problems which exist from the production phase to the market distribution phase. First of all, all these problems should be addressed. The uncertainty has grown due to political instability. This has affected production and investment. Lack of electricity is another problem in this sector. As electricity is highly essential for this industry in comparison to other industries, we are facing difficulties in terms of regular supply of electricity. Another problem is that old technology is applied in the distribution system. We are also facing trouble in terms of transportation and labour. The industry is facing crisis in terms of human resources as well. We don’t have enough manpower in this sector. The liquidity crisis has also affected the production and market.  Such problems need to be addressed. 

But, the supply of electricity has been eased for some time. Perhaps the problems have minimised because of this?
The industries should be supplied with quality electricity 24 hours a day. The positive side is that the supply of electricity has increased up to a certain extent.  Despite the reduction in power cuts, there is no improvement in the quality resulting in problems such as low voltage and tripping. Upgrading the supply system is a must to solve this problem.

It’s said that there is sufficient domestic production to meet internal demand. But the latest statistics show that a large quantity is being imported? Why is this so?
A lot was imported after the earthquake. During that time, production was very low due to the power crisis. The import increased rapidly as domestic production could not meet the demand of the consumers. However, the situation has changed now and the imports have sharply declined.  

Currently, large infrastructure projects are given tax subsidies when they import iron rods. What opportunities can domestic industries get if this provision is removed? 
The government needs to remove this subsidy.  If it continues, domestic producers should be provided the opportunity to sell iron rods to the projects. The cost of imported rods is less because of their minimum cost of production. On top of that, there are maximum imports due to tax subsidies. This has affected the local production. If the tax subsidy is removed, the demand can be fulfilled from the domestic production itself. This will be an opportunity for local industries for market expansion. The government has to remove the tax subsidy to encourage the consumption of local products. This can create an environment to foster investment and employment opportunities in the Nepali industries. 

Export of iron and steel has been increasing. How can we take maximum benefit from this?
India is the market for such products exported from Nepal.  The cost of production in India is less due to subsidies and high scale production. Due to this, we must first reduce the cost of production to compete with the Indian products. The production sector should not face any problems. For this, regular and quality supply of electricity is the primary need, which has not been fulfilled.  

To solve the labour problems, there should be a hire and fire system. We also need investment and a production-friendly Labour Act. We are not able to properly supply the raw materials and finished products to the destination due to transportation problems. The government needs some effective policy arrangements to encourage exports.

 

“Electricity shortage and labour problems affect the capacity utilisation of Nepali iron and steel industries”​

Ashok Kumar Baid, Director Shalimar Steels Pvt LtdAshok Kumar Baid
Director
Shalimar Steels Pvt Ltd

What factors do you think are behind the healthy growth of the Nepali iron and steel industry despite the various problems?
Various factors contribute to the growth of the iron and steel industry. But the major elements undoubtedly are the country’s GDP growth and growing construction activities. Also, the growth could be psychological as well. There was a shortfall in production as the demand grew higher compared to the supply.

How have the domestic iron and steel industries evolved over the years in terms of technology and new products?    
Industries have evolved a lot over the years, but not as per the expectations. Nevertheless, Nepali industries have started manufacturing wire rods and ingots which were not done earlier. Also, automated plants are being installed by producers. Many have already installed such plants.

How has the post-quake reconstruction drive aided the domestic iron and steel industry? How much has the demand increased after the 2015 earthquake?    
The demand didn’t increase much immediately after the earthquake. It was basically due to the slow implementation of the government budget and also because of the slump in the country’s GDP growth. Nevertheless, people have realised that they must not compromise on the quality of the constructions. So, the demand for steel and other construction related products has increased to meet the quality and new government standards for constructing houses. 

How is the rate of capacity utilisation in this industry on average in your estimation?    
 Nepali producers have been utilising 50 percent of their production capacity on average. The lack of adequate amounts of electricity and labour problems are the major factors affecting capacity utilisation.

Nepal is said to be self-sufficient in iron rods. However, the recent import data shows a different picture. Why has there been a sharp increase in the import of iron and steel materials?    
Earlier, Nepal was self-relaint before the long hours of power cuts started. Now it has become dependent on others. As the plants are not running at their full capacity, the cost of production is high. The use of diesel for power generation pushes the cost of production further. All these factors have allowed other countries to export their products to Nepal. 

What iron and steel products are being exported from Nepal at present? 
Certain items like GI pipes and GI sheets are being exported.

What are the major challenges being faced by the iron and steel industry? 
Despite the potential, the sector faces many problems. Power shortage and labour related problems are the most common issues for the industry. Meanwhile, the pace of improvement and innovation is low due to the lack of R&D. We can produce better products and manufacture innovative items if the government provides us with research opportunities and design facilities. Similarly, many polices do not benefit the industrialists.

How have the difficulties eased for the iron and steel industry with the ease in the electricity supply in the recent months?  
The power supply problem has eased just a bit. It’s too early to say how it will significantly benefit the industries. Hopefully, sometime soon in the near future, we shall see a notable drop in the import of iron and steel products in Nepal if the industries can get ample amounts of electricity.

Construction of large hydropower and other infrastructure projects require iron rods bigger than 32mm which is not produced in Nepal. Domestic producers say that they have the capacity to produce such iron rods.  What is the situation in this regard?
32mm iron rods are not produced in Nepal as there is less demand for them expect for the large projects. It is not feasible for Nepali iron and steel producers to manufacture 32mm iron rods for that very small market. Meanwhile, VAT subsidies and low custom duties on the import of iron rods make it easier and cheaper for the projects to import them. 

What opportunities will Nepali iron industries have if the VAT subsidy on the import of iron rods is removed?
If the VAT subsidy is removed, then Nepali manufacturers could start producing 32MM iron rods as well which are used in hydropower and other infrastructure projects. The removal will eventually lower down the cost of production as the capacity of the plants will increase to meet the demand. Overall, the market will benefit and the country will be self-sufficient in iron rods in such a situation. 

 

“VAT and customs duty subsidy on importing steel bars to large projects need to be removed”​

Arun Goenka, Director, Goenka GroupArun Goenka
Director
Goenka Group

The Nepali iron and steel industry has been thriving despite various problems. What are the factors driving this healthy growth?        
Iron and steel industries playa crucial role in the development and growth of a country.  The pace of development activities significantly slowed down in our country for over a decade during the time of the insurgency. With the end of the insurgency a decade ago, the long overdue development work gathered pace creating demand for construction materials like iron and steel. Nepali iron and steel industries are thriving due to the increasing demand for iron rods, pipes, GI sheets and other various types of materials that are used in the construction of houses, buildings and different large infrastructure projects.  

How have the industries evolved over the years in terms of technology and new products?    
The iron and steel sector has witnessed major changes technology wise over the years. New production technologies helped manufacturers increase production and come up with better products. Earlier we used to produce TOR steel bars. Now we are producing TMT steel bars that are improved products enabling engineers to design structures consuming less steel ultimately yielding in higher savings for the developers.  

How has the post-quake reconstruction drive aided the domestic iron and steel industry? How much    has the demand increased after the 2015 earthquake?    
We have been observing a good demand for iron and steel products that are used in constructing houses, roads and other infrastructure. The demand has increased by 25 percent compared to prior the earthquake. 

How is the rate of capacity utilisation in this industry on average in your estimation?    
Earlier, all iron and steel plants used to run at 40 percent of their installed capacity due to the shortage of electricity. Presently, the rate of capacity utilisation is over 50 percent with the improvement in the power supply. 

It’s believed that Nepal has become self-sufficient in iron rods.  However, the recent import data shows a different picture. Why has there been a surge in the import of iron and steel materials?    
During the long hours of power cuts, none of the plants were supplying sufficient amount s of steel in the market which created a shortage. The huge import of iron and steel products from neighbouring countries was compensating for the shortfall. The production will meet the demand if all plants in the country are able to produce at their full capacity.

Iron and steel products are noted as potential items of export at present. How do you view this possibility? 
Only a few items including GI and black pipes are exported from Nepal. Technically it is not viable to export finished products unless we have our own raw materials available in the country. We are fully dependent on importing the raw materials.

Have the difficulties eased for iron and steel industries with the ease in the electricity supply in the recent months?            
The situation has improved resulting in the production of steel both quality and quantity wise. It has also led to some notable corrections in the prices of the iron and steel products.

Construction of large hydropower and other infrastructure projects require iron rods higher than 32mm which are not produced in Nepal. Domestic producers say that they have the capacity to produce such types of iron rods. What is the situation in this regard?    
It is a technical question. With the VAT exemption and customs duty subsidy, big construction companies have an advantage in importing iron and steel bars. If the same incentive is provided to the domestic iron and steel industries, they can produce steel bars of any quality and any size. Moreover, if the project developers are made to buy the products from domestic industries, it will boost the economy and the Nepali iron and steel industry as well. It will generate more jobs and also reduce the country’s swelling trade deficit.

What opportunities do you see for Nepali iron industries if the VAT subsidy on the import of iron rods is removed?        
Firstly, the installed capacity of all industries will be utilised at the optimum which will reduce the cost of production.  It will also be beneficial to the general consumers as well. 

 

“Nepali producers have been supplying products as per their brand value and market approach”​

Suraj Upreti, Managing Director, SR GroupSuraj Upreti
Managing Director
SR Group

What contributing factors do you see for the growth of Nepali iron and steel industry despite various problems? 
The excess demand (of bars and other construction materials of iron and steel) compared to production has been helping the industry. The scenario was very different for the domestic producers a few years ago.  

How have the domestic industries evolved over the years in terms of technology and new products?
Earlier, we used to produce plain iron rods. We now produce TMT bars.  Nepali iron and steel industries have adopted advanced technologies over the years. Industries are now capable of producing quality products in large quantities to fulfill the demand in the market.  

What is the annual demand for iron and steel in the country? How much is met through domestic supply and through imports?
The demand is growing day-by-day. The annual demand is not less than 500,000 tonnes. There is the import of steel in large quantities till date primarily due to the lack of adequate electricity for production and subsidy on the import of steel for large infrastructure projects. Looking at the current scenario, I think the demand can be fulfilled by the domestic producers. The import of TMT bars last year was nearly 100,000 tonnes. The domestic production was not sufficient to meet the demand because of the insufficient supply of electricity and the severe problems caused by the Terai stir and border blockade. The drastic increment in demand was due to the resuming of major construction works and the start of reconstruction activities in the earthquake affected areas.

What is the average rate of capacity utilisation in this industry in your estimation?
The industry was working at a capacity rate of 40 percent a few months back. At present, the rate stands at 70 percent. 

What types iron and steel products are being exported from Nepal?  
Our major export items are roofing sheets, TMT bars and structural steel, which are being supplied to the Indian state of Uttar Pradesh. The quality products of Nepali industries have been attracting more demand from India. If we get enough electricity and subsides on the import of raw material and export of the finished products, we can definitely increase the export quantities.  

How has the post-quake reconstruction drive aided the domestic iron and steel industry? How much has the demand increased after the 2015 earthquake?
The time was tough for the producers after the earthquake. But with the reconstruction activities gathering pace, the demand has risen. The building design and reinforcement requirements for earthquake resistant homes and other structures have fueled the consumption of steel bars and other construction materials made of steel. In general, there is an increment of 30 percent in steel reinforcement for constructing a normal residence. 

How have the difficulties eased for iron and steel industries with the ease in the electricity supply in the recent months? 
The situation has certainly improved for us. Thanks to the new management team of the Nepal Electricity Authority (NEA) for making it possible. We are getting nearly 16 hours of electricity daily at present (nine hours at night and seven hours at day time). We can increase our manufacturing efficiency if we get continuous supply of power. 

Domestic producers say that they have the capacity to produce steel bars of dimensions 32mm and above required in the construction of large infrastructure projects which are not produced in Nepal till date. What is the situation in this regard?
If we get actual demand and a certain timeframe for production, we can produce TMT bars of any size at the required grade.

How do you think Nepali iron industries will benefit if the VAT and customs subsidy on importing steel bars for large projects is removed? 
The subsidy makes the products cheaper, making it hard for the Nepali industry to compete. There is no doubt that we can provide quality products on time if we get the same incentive.

Nepali producers at times are also criticised for acting like cartels to manipulate the market price of iron rods.  Why can’t the price factor solely rely on the supply and demand side?
At present, the pricing factor depends on the demand and supply side. It also relies on the fluctuation of the price of raw materials (MS billet) in India. The curtailing power doesn’t exist anymore in the market as all producers have been supplying products as per their brand value and market approach. 

 


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M.S.Sharma

Now Napal is towards Technology advancement with increase of Production capacity but lacking due to electric supply,labour problem and road conditions along with subsidary for import.if Govt will focus on these then may very soon will be self sufficient in steel industry and export near by border area,which can help to increase the infrastructure of the country as well as GDP Growth.

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