With the new budget of the fiscal year 2021/22, the government has decided to allow the private sector to import and distribute the salt. The 221st point of the budget announcement states that salt production and distribution will be made competitive with the participation of the private sector to make the supply of iodised salt available at a reasonable price.
The budget announcement has posed a threat to the business of Salt Trading Corporation Limited, a state-owned company that has been importing and selling salt in Nepal since 1963. The decision is said to be in the interest of Prime Minister KP Sharma Oli’s economic advisor Moti Lal Dugar, former state minister for industry, commerce and supplies.
Govt-controlled salt trade in Nepal
The government has a 22 per cent share investment in Salt Trading Corporation Limited. It is enlisted in Nepse (Nepal Stock Exchange) and also trades chemical fertilisers, LP (cooking) gas, salt, sugar, pulses, rice, nuts among other commodities. The company has been distributing more than 25 per cent dividend to its shareholders for the past 10 years. In the secondary market, shares of the company are being bought and sold at more than Rs 11,000 per share.
The company imports 2.5 million tonnes of salt annually from India and, distributes salt through more than 6,000 sales outlets across Nepal. The salt is sold as ‘Bhanu’ in the high hills and mountains at Rs 9/kg, ‘Aayo’ in the Terai and mid-hills at Rs 20/kg, and ‘Shakti’ in the Terai at Rs 17/kg, informs Kumar Rajbhandari, the information officer of the company.
According to him, the company sells the salt in Terai at a price that gives it neither profit nor loss whereas, in other parts, it is in loss due to transport difficulties. Although the government provides a subsidy of Rs 160 to 170 million annually for the delivery of salt in hilly and mountainous areas, Rajbhandari says it is not enough.
The confused corporation
Officials at the Salt Trading Corporation have been stunned that the budget has snatched away the company’s monopoly of 57 years and affected the salt trade system of the country worth Rs 2.5 billion a year. They say they are concerned that the government has never held a discussion before on it.
Rajbhandari says that though the organisation has stood by the government in all situations, it only faced troubles instead of being led by the government as its guardian. “Whether it’s a natural disaster or a blockade, an earthquake or a prohibitory ban, we have continued our work diligently.”
“Even in the worst-case scenario, our stock will last for 10 months. We do not compromise on quality; we have delivery means too. Yet the government is marring our existence.” Rajbhandari adds.
Who proposed it anyway?
Not just the corporation, but officials from the Ministry of Industry, Commerce and Supplies have also said they found out about the private sector’s intrusion into the salt trade only after the Finance Minister Bishnu Paudel’s budget announcement.
According to the officials of the ministry, the issue of making the salt distribution industry “competitive” was never raised while preparing the budget nor while they were formulating the policy and programme for the fiscal year w021/22.
“We only sent a proposal regarding the subsidy on transportation for the budget,” states an official from the Ministry of Supplies.
Meanwhile, the spokesperson of the Ministry of Finance, Mahesh Acharya, says whether the issue of the competitive market came from any ministry or not, it is now in the budget legally. “The Ministry of Commerce should go immediately into implementation.”
Dugar’s questionable role
When Moti Lal Dugar was the state minister, his company–Dugar Spices–started producing table salt and marketed it with its brand name Century at Rs 35 per 100 grams.
Dugar’s company bought salt cheaply from Salt Trading and reproduced it, only to sell it at a higher price. Therefore, the National Consumers Forum Nepal filed a complaint at the Department of Commerce and the Department of Food Technology and Quality Control. The complaint also reached the Ministry of Industry and the Prime Minister’s Office.
However, nobody dared to take any legal action against Dugar Spices, a company of the prime minister’s confidant.
The forum’s Chair Prem Lal Marhajan informs that the sitting state minister Dugar had come to his house pleading to not report the issue to the media. However, many media channels covered it, and the personal secretary of the then commerce minister Lekh Raj Bhatta, Hitesh Ojha, called Maharjan to the ministry and put pressure on him to leave the Consumer Protection Council.
Then, Dugar became the PM’s economic advisor.
Meanwhile, Dugar says, “I came to know about this after the announcement in the budget like others. I just came out of the temple, I do not know how to lie, I have no role in it.”
Open competition?
Dugar argues that the budget did not say that it was for him.
He further says that anyone from the private sector can enter the competitive market, but blaming him was an attempt to discredit him.
“In the open market, is there only Moti Lal Dugar who sells salt? There are hundreds of them in India. Why protest only in Nepal?” he says. “Everything has been exaggerated. Now what, shall we stop running the salt industry now?” He adds.
