What is the Overdue Amount of Over One Billion Rupees Demanded by the Government from Industries in Industrial Zones Within 7 Days?
Image source, IZML
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After the government issued a notice on June 8 demanding payment within 7 days to clear years of outstanding dues for land, buildings, electricity, and water used by industries established in industrial zones, industrialists have expressed strong opposition.
The Industrial Estate Management Limited has released details of arrears amounting to NPR 884.5 million from 635 industries and entities across 10 industrial zones nationwide.
The government has warned that failure to settle the dues will lead to strict actions including electricity cut-offs.
Who Owes How Much?
Among the ten industrial zones, Balaju Industrial Area has the highest arrears with 151 industries and establishments owing NPR 439 million, according to government records.
Similarly, 131 industries in Hetauda Industrial Zone owe NPR 209 million, while 94 industries in Patan Industrial Zone have arrears amounting to NPR 101 million.
Industries in Pokhara and Butwal Industrial Zones have outstanding dues of approximately NPR 44 to 45 million each, while industries in Bhaktapur Industrial Zone owe NPR 17.1 million. In Nepalgunj Industrial Area, the arrears stand at NPR 13.4 million. Industries in Dharan, Birendranagar, and Gajendra Narayan Singh Industrial Zones owe NPR 7.1 million, NPR 650,000, and NPR 630,000 respectively.
Of these outstanding amounts, land rent arrears alone exceed NPR 820 million.
Central Issue: Rent Dispute
Image source, Prabhat Poudel
The dispute arose over a rent increase implemented in 2018.
According to Vasudev Sodari, Public Relations Officer of Nepal Industrial Estate Management Limited, the land rent was raised that year.
Seventy-five years ago, the rent for Balaju land was increased from NPR 16,000 per ropani to NPR 81,000. Similar increases occurred in other areas. With an annual 5% increment, the rent now reaches approximately NPR 113,000 per ropani in Balaju, Sodari stated. He added that this rate remains much lower compared to surrounding Kathmandu areas.
“However, the industries challenged this increase in court the very year it was raised. The High Court ruled in favor of the industries, but due to certain reasons, the ruling was not enforced immediately. It was decided to implement a new bill from June 6, 2022. The industries also filed a petition against this at the Supreme Court,” Sodari explained.
Image source, Prabhat Poudel
However, the Supreme Court ruled that the rent increase should take effect from June 6, 2022 only and be applied prospectively, and it ordered regular rent revisions.
Although the government filed a review petition against this ruling, the industries oppose the sudden implementation of the rent increase before the review decision, arguing that it contradicts Supreme Court orders.
“We believe the Supreme Court’s order must be implemented. Even if the government pursued a review petition, we insist the prior order be followed until a decision is finalized,” said Ejaz Alam, President of the Nepal Industrial Estate Industries Federation.
If their demands are not met, the industries are prepared to take the case back to court.
Despite the seven-day notice based on the old rent rates, the industries complain that the government action contradicts the Supreme Court’s directive until review decisions are made.
“Our demand is to pay the old rent from 2018 to 2022 and the current rent thereafter. Otherwise, we will be forced to approach the court again,” the industries said.
They stated that most industries have been paying electricity and water charges, except for land rent.
The government, however, insists that the new rent rates are essential for the smooth management of industrial zones and warns of strict action otherwise.
Details of Disputed Overdue Amounts
Total overdue amount: NPR 884.5 million
Land rent arrears: NPR 820.7 million
Building rent arrears: NPR 22 million
Electricity charges arrears: NPR 38.9 million
Water charges arrears: NPR 2.118 million
Miscellaneous arrears: NPR 724,000
Highest arrears: Balaju Industrial Zone (NPR 439 million)
Lowest arrears: Birendranagar Industrial Zone (NPR 662,000)
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