Several popular brands of cigarettes are in short supply in Nepal’s Kathmandu Valley due to hoarding and black-marketing by some wholesalers, according to Republica. Some wholesalers have begun to hoard cigarettes following media reports that the government was planning to hike excise duty on cigarettes through the budget for fiscal year 2015-2016. In addition to reducing supply, some wholesalers are also accused of raising prices in an arbitrary manner.
“It is very difficult to get [cigarettes] as per our demand,” retailer Ram Kumar Rai told Republica. “Not only are wholesalers reducing supply, they are also overcharging us for cigarettes.”
Rai said he was charged npr50 ($0.44) more for a box of Surya cigarettes containing 10 packets. “The wholesaler asked me to pay npr1,450 for a box of cigarettes which cost only npr1,400,” he said.
Retailer Madhav Timalsina, of Sundhara, paid npr1,500 for the same pack. “Wholesalers have been overcharging us, citing short supply,” he told Republica. “We are not getting cigarettes as per our demand, as wholesalers are hoarding them anticipating duty hike in upcoming budget.”
Meanwhile, manufacturers maintain that they have not reduced the supply of cigarettes.
“We have increased supply by around 10 percent recently,” Ravi KC, vice president of Surya Nepal, told Republica. “Our authorized dealers and cycle-boys have not reported us about shortage and hoarding of cigarettes.”
Department of Commerce and Supply Management officials have vowed to intensify market monitoring and to take action against anyone found guilty of hoarding cigarettes or participating in black-marketing.
The Industrial Promotion Board (IPB) in Nepal announced an indefinite moratorium on the registration of new gutka manufacturing units after figures from the Inland Revenue Department showed only 150 of 455 registered gutka factories pay taxes, reports Kantipur Online.
Following India’s April 2011 directive banning the sale of gutka in plastic pouches, Indian gutka producers have shifted their operations to border towns in Nepal’s Terai region.
An IPB task force will investigate the gutka industry and submit recommendations within two months.
According to the customs’ department, local manufacturers exported 361,000 tons of gutka in the first five months of fiscal year 2013, more than three times the amount exported in fiscal year 2012.
The government of Nepal is unlikely to meet all of the pay demands of former workers at the Janakpur Cigarette factory, according to a story in the Daily Republica. The factory, which was established in 1965 with the support of the Russian government, has been closed for two years.
It used to manufacture popular brands of cigarettes such as Yak, Gaida and Deurali. However, with the entry of Surya Tobacco into the market, its near monopoly ended and it started incurring losses. By the end of 2010-11, the company had a cumulative loss of Rs170.80 million.
The factory cited the use of obsolete machines as one of the reasons leading to its collapse. But other factors were said to include unnecessary political intervention in the factory’s operation, the appointment of its chief and general overstaffing.
“The government is positive about demands placed by workers, but it may not be able to fulfill all of them,” an official at the Ministry of Finance (MoF) was quoted as saying. “The government will sit again with workers who are anticipating early launch of the voluntary retirement scheme to settle the issue.”
According to the official, it would cost the government about Rs2.6 billion to meet the workers’ demands and provide severance packages to employees who want to retire voluntarily from their jobs. This amount is higher than the Rs1.26 billion calculated by the government based on existing rules.
Earlier, a team formed by the MoF to assess the economic viability, liabilities and assets of the factory, valued its assets at about Rs10 billion and its liabilities at about Rs2.3 billion.