A shortage of sponge iron for steelmaking has caused four of the five steel plants in the Pasakha region to temporarily close down, says the association of Bhutanese industries.
The Lhaki steel and rolling mills, Bhutan Concast, KK Steels and Bhutan Rolling Mills have all ceased production with some being closed for more than a month.
The reason for the shortage has been a shortage of railway rakes in India to transport the material to Bhutan.
According to the secretary general of the association of Bhutanese industries, Letho, raw material could not be transported, as there is a delay in the placement of railway rakes in India. “Also, there’s a delay in the movement of rakes carrying industrial raw material from India to Bhutan,” he said.
Indian media also reported that the shortage of railway rakes in India have resulted in unwarranted delays concerning delivery of industrial material.
“The Bhutanese steel industries don’t have a choice but to temporarily shut down and wait. If they have to transport the raw material through other means, then it would incur a huge cost,” said Mr Letho, the secretary general of the Association of Bhutanese Industries.
There are now fears that other Bhutanese industries that import raw material from India, such as the ferroalloy and calcium carbide industries, will also suffer from a shortage of raw materials. Now the Association has raised a petition to the government to look at the issue. Bhutan’s economic affairs secretary, Dasho Sonam Tshering, said that the issue has been brought to its attention and that the department has taken up the issue with the Indian government.
Steel plants in Bhutan manufacture TMT bars, billets, ingots and structural steel which are sold in India. Other than the Punatshangchu hydropower project Phase I there is not much domestic demand in Bhutan but even here Bhutanese suppliers are placed at a disadvantage as they are unable to compete with Indian suppliers who are exempt from excise duty. Under the trade agreement between the Indian government and Bhutan on Punatshangchu hydropower project it was agreed that both the governments would exempt central excise duty of India, taxes/levies or duties for plant, raw material, equipment, machinery and services to be used for the project. Bhutanese companies say that the same privilege is not given to them, especially on raw materials.
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