The policy to lease out some of the state-owned textile mills to minimise their losses did not pay oiT and has rather created fresh difficulties for the private sector textile mills.

Bangladesh Textile Mills Corporation (BTMC). which owns the government textile mills, leasedout 14 textile units under a ‘service charge system’ in 1997. The private yarn traders paid a fixed service charge to the mills and had their yarn produced.

But as this service charge was much lower than the actual production cost, the private sector mills, which produce yarn, have been facing uneven competition. according to a study by a private consultancy firm appointed by Bangladesh Textile Mills Association (BTMA). the apex body of the private sector textile mills.

Besides, BTMC could not

succeed in checking losses of these mills.

BTMA will soon meet the State Minister for Textiles to inform him about the adverse Impact of this lease out system and will seek remedies.

The consultancy and management firm conducted the study on four leased out BTMC textile mills -- Quaderla Textile Mills. Darwani Textile Mills. Dost Textile Mills and Amin Textile Mills.

According to the study, the actual production costs of per kg of yam (average 32/ 1 count) hi Quaderla, Darwani. Dost and Amin are 126.17 per cent, 80.69 per cent, 67.24 per cent and 272.58 per cent higher than the service charge.

The service charge for producing each kg of yarn in these mills are Tk 29.76. Tk 29.27. Tk 30 49 and Tk 26.06 respectively.

where as the actual production cost of per kg of yarn in those selected textile mills are Tk 67.34. Tk 52.88. Tk 50.96 and Tk 97.09 respectively, the report said.

As a result of this huge gap between actual production costs and service charge, the yarn produced and sola by the lease holders of these mills enjoys cost advantage, the report said.

On the other hand, even after leasing out the mills, these have Incurred a total loss of Tk 4.24 crore in November. 1999, the report said based on the monthly performance data of the mills. The loss of these four mills -- Quaderla. Darwani Dost and Amin -- stood at Tk 94.47 lakh.

Without any long-term capital investment and Interest on long and short-term loans, the report added that, the lease holders are enjoying huge cost

advantages and the private sector spinning mills are facing uneven competition.

BTMC leased out these 14 mills to private parties, most of whom are basically yarn traders. In 1997 for a period of two years and then extended the contracts or re-appointed leaseholders through competitive basis.

As the state-owned textile mills under BTMC have been Incurring huge loses for the last couple of years, the government decided to privatise most of the mills and lease out the rest to the private parties against service charge.

The government has already privatised 13 units and laid off 21 mills, which are also awaiting privatisation and transfer of management to the employees and workers.