Insecurity dogs ITC’s business safeguard plan in Nepal

February 13th, 2011 - 4:33 pm ICT by IANS  

By Sudeshna Sarkar
Kathmandu, Feb 13 (IANS) After suffering attacks and disruptive strikes in Nepal’s lawless plains for years due to diminishing security and protracted political instability, Indian tobacco major ITC’s strategy to safeguard its investments has now been dogged by further obstructions in the hilly west.Surya Nepal, ITC’s subsidiary in the Himalayan republic, has received a blow to its plans to start a second manufacturing plant in the relatively peaceful western hills with local residents bringing construction to a standstill.

Surya Nepal, Nepal’s largest private-sector enterprises with a turnover of over $100 million, decided to establish a second tobacco manufacturing unit in Khairenitar village in Tanahun district after its original tobacco manufacturing factory in Simara town in Bara district on the India-Nepal border faced several strikes and other disruptions, especially since the 10-year Maoist insurgency.

The new factory is scheduled to come up in 18 months and give continuity to production.

However, since Friday, young men from at least three local clubs forced the construction to halt, saying Surya officials had not formally apprised them of the impact the project would have on the environment.

They also alleged a local primary school had been demolished due to the ongoing work.

Surya officials say they have had consultations on the environmental impact assessment report and other issues with local stakeholders, including the political parties.

They also say they had an agreement with the school to erect a modern building and had pulled down the old building to make way for that.

Industry sources attribute the obstruction to pressure tactic by local power groups to have the construction work given to contractors of their choice.

Other Indian investment projects in the past have been also obstructed by locals with mounting demands for schools, health facilities, and jobs for local families.

ITC holds 69 percent stake in Surya Nepal with, British American Tobacco (Investment) Ltd. 2 percent and the rest belonging to 20 Nepali individuals and corporates.

In 2004, Surya Nepal diversified into garments manufacturing with a state-of-the-art factory in Biratnagar in eastern Nepal that produces the John Player brand of clothing for men.

(Sudeshna Sarkar can be contacted at sudeshna.s@ians.in)

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