Industrial capacity utilisation in Bagamati Province declined sharply in the first half of the current fiscal year, according to a recent report published by Nepal Rastra Bank (NRB). The central bank’s mid-year review of provincial economic activity shows that average capacity utilisation among selected industries in the province dropped to 33.8%, down from 41% during the same period last year, a decrease of 7.2 percentage points.
Among the sampled industries, hydropower plants reported the highest capacity utilisation at 99.9%, while ointment manufacturing in the pharmaceutical sector recorded the lowest at just 7%.
During the review period, output increased in industries producing beer, soft drinks, electricity, animal feed, and cigarettes. However, production declined in a wide range of sectors, including processed milk, cement, instant noodles, paints, various pharmaceutical products (such as tablets, capsules, syrups, liquids, and ointments), garments, fabric-based footwear, bricks, and transformers. These industries collectively employed 7,225 people — 7,097 Nepali workers and 128 foreign nationals — according to the report.
Despite the drop in capacity utilisation, lending to the industrial sector in Bagamati Province rose by 36.6%, reaching Rs 1179 billion. In the same period last year, industrial lending had grown by only 7.8%, totalling Rs 973.6 billion. As of this fiscal year, industrial loans account for 21.71% of the total credit portfolio in the province.
The report highlights a stark geographical disparity in credit distribution. Kathmandu alone accounted for 92.4% of total industrial lending in the province, amounting to Rs 1089 billion. In contrast, Rasuwa District received only Rs 130 million, a mere 0.01% of the total.
Sector-wise, lending to agriculture, forestry, and beverage production rose by 33.5%, while credit to the electricity, gas, and water industries grew by 29.9%. Construction sector lending increased by 18.5%, followed by 13.6% in non-food manufacturing and 13.5% in mining. However, loans to the metal, machinery, and electronics industries declined by 7.8%.
The electricity, gas, and water sector received the highest share of industrial loans at 34.1%, followed by non-food manufacturing at 33.8%. Agriculture, forestry, and beverages received 15.3% of the total, construction 12.5%, and metals and machinery 3.7%. Mining remained the least funded sector, with just 0.7% of total industrial credit.
