The government of Nepal is unlikely to meet all of the pay demands of former workers at the Janakpur Cigarette factory, according to a story in the Daily Republica. The factory, which was established in 1965 with the support of the Russian government, has been closed for two years.
It used to manufacture popular brands of cigarettes such as Yak, Gaida and Deurali. However, with the entry of Surya Tobacco into the market, its near monopoly ended and it started incurring losses. By the end of 2010-11, the company had a cumulative loss of Rs170.80 million.
The factory cited the use of obsolete machines as one of the reasons leading to its collapse. But other factors were said to include unnecessary political intervention in the factory’s operation, the appointment of its chief and general overstaffing.
“The government is positive about demands placed by workers, but it may not be able to fulfill all of them,” an official at the Ministry of Finance (MoF) was quoted as saying. “The government will sit again with workers who are anticipating early launch of the voluntary retirement scheme to settle the issue.”
According to the official, it would cost the government about Rs2.6 billion to meet the workers’ demands and provide severance packages to employees who want to retire voluntarily from their jobs. This amount is higher than the Rs1.26 billion calculated by the government based on existing rules.
Earlier, a team formed by the MoF to assess the economic viability, liabilities and assets of the factory, valued its assets at about Rs10 billion and its liabilities at about Rs2.3 billion.