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The government has finalised agreement conditions for leasing out state-owned jute mills to the private sector for five to twenty years, with clauses that bars the practice of sub-leasing and mortgaging.
To lease a Bangladesh Jute Mills Corporation (BJMC) mill, an interested party will have follow twenty regulations, textile and jute ministry sources told The Business Post, adding that the government is planning to sign agreements with selected recipients on January 6 next year.
As per the lease conditions, a leasee will not be allowed to change ownership of a mill and the government reserves the right to cancel the lease on a three months’ notice if a leasee violates any of the rules.
If a leasee fails to start production on schedule, as mentioned in the agreement, their lease will be cancelled automatically, and they will have to pay three months’ rent as punishment.
Ministry sources further say the government will renew a lease after expiration it if the leasee’s performance is found satisfactory in the previous period. In that case, the recipient will be able to apply for renewal six months before the lease expiration date.
Before handing over a mill, representatives from the government and lease-recipient entity will document all movable and immovable assets in that particular property, and the two parties may cancel the lease with a six months’ notice.
The government in 2020 shut down all jute mills under the BJMC due to large amount of losses and mismanagement. To resume production in those mills, the government later decided to lease out these factories to the private sector.
5 mills to be leased out initially
Fifty-nine national and international entrepreneurs have shown interest in this regard, insiders said, adding that the government has decided to lease out five state-owned jute mills to the private sector after evaluating the tenders.
According to the textile and jute ministry, Mimo Jute will get Crescent Jute Mill, Khulna; UK-based company Jute Republic will get National Jute Mill of Sirajganj; Unitex Composite will get KFD Jute Mill, Chittagong, Sad-Musa Group will get Hafiz Jut mill; and Bay Footwear will get Bangladesh Jute Mill, Narsingdi.
The conditions further state that to prevent moving of properties, all movable and immovable assets of a mill will be reviewed every year, and the leasee will be liable for any damage.
It adds that an entrepreneur will be responsible for the maintenance of all kinds of machinery, and in case of installing new machinery, the old ones must be returned to the government. To change any design, a leasee will have to take permission from the authorities.
An entrepreneur will have to pay 24 months’ of rent in advance for taking lease of a state-owned jute mill, and the government will refund the money without interest after successful completion of the lease period.