SATV, Kathmandu, July. 15 - The government has moved ahead with preparations to bring the Butwal Yarn Factory (BYF) back into operation after it remained closed for nearly two decades.
With the Ministry of Industry, Commerce and Supplies (MoICS) beginning a Due Diligence Assessment (DDA) of the factory’s assets and liabilities, hopes have emerged that the long-idle industrial facility could resume operations.
A five-member technical team led by Krishna Kumar Bhattarai from the Ministry of Finance (MoF) has been carrying out an on-site study of the factory since June 19. The team is assessing the condition of buildings, machinery, production infrastructure, market prospects and the investment required, and plans to submit a report to the government within around two months.
According to Dol Raj Sharma, acting chief and technical officer of the BYF, as mentioned in the budget for fiscal year 2026/27, a model for operating the industry will be determined after completion of the DDA. He said the factory could be brought back into operation if the necessary modern equipment were installed.
However, the current condition of the factory is extremely poor. Water leaks from the roof have caused water to accumulate inside the machine halls. Machinery worth millions of rupees has become rusty, while many parts of equipment have been damaged due to water exposure. The machine halls remain dark due to the lack of electricity, and equipment is deteriorating day by day because of inadequate maintenance.
Bhattarai said a detailed study is being carried out on the condition of the 36-year-old machinery, market demand for yarn, export potential and the investment required to operate the factory.
Construction of the BYF began in March 1983, and production started in 1992. However, the factory was shut down in February 2007 due to poor management, political interference and employee disputes. After 402 employees were given retirement benefits and discharged in 2009, the industry became completely inactive. Currently, only three employees are working at the factory.
Some of the factory's buildings have been occupied by riot-control police, while a temporary COVID-19 hospital was also operated there during the coronavirus pandemic. However, some important materials, including underground electricity infrastructure, have been stolen.
Chairman of the Butwal Chamber of Commerce and Industry Hari Prasad Aryal said that the revival of the factory would create employment opportunities and provide fresh momentum to cotton farming, the textile industry and the overall economy of western Nepal.
He suggested that if reopening the factory is not feasible, the land should be made available to the private sector for industrial purposes.
The government holds a majority stake in the factory, which has 4,630 shareholders. An initial estimate suggests that around Rs. 1 billion will be required to restart operations. The government is reportedly planning to produce yarn in Butwal and textiles in Hetauda, with an initial aim of manufacturing uniforms for security personnel domestically.
The factory was established under the concept of former King Birendra Shah to make the country self-reliant in textiles. Spread over 144 ropanis of land, the factory occupies around one-third of the total area of the Butwal Industrial Estate.
