The government is moving to reopen two long-shuttered state-owned textile mills by handing them over to private partners under 30-year public-private partnership (PPP) agreements.
The proposals for Magura Textile Mills Ltd. and Daroani Textile Mills are scheduled to be placed before the Cabinet Committee on Economic Affairs on Wednesday for approval, according to sources at the Ministry of Textiles and Jute.
Under the proposed arrangements, Charka Textile Ltd. will operate Magura Textile Mills, while Classical Handmade Products Ltd. (CHP) will take responsibility for Daroani Textile Mills. The companies were selected through international competitive bidding, although only one bidder ultimately submitted a tender.
The PPP initiative aims to bring the two idle government assets back into production without requiring major fresh investment from the government. The private partners will bear the costs and risks associated with investment, operation, maintenance and modernisation.
Magura Textile Mills has government-owned land valued at around Tk136.39 crore, while the total value of its assets is estimated at approximately Tk144 crore. More than 94% of the asset value comes from the land.
Under the proposed agreement, the government will receive an upfront premium of Tk4.95 crore and a development fee of Tk50 lakh. After a three-year grace period, the annual concession fee will be Tk1.30 crore.
The relatively low initial cash receipts compared with the value of the government-owned land have raised questions about whether the arrangement will ensure sufficient “value for money.” However, officials argue that the broader economic benefits including production, employment, exports and tax revenues should also be considered.
Daroani Textile Mills in Nilphamari has remained closed for more than four decades. Classical Handmade Products Ltd. plans to invest around Tk200 crore to bring the mill back into production.
The mill stands on 37.68 acres of land, with the land alone valued at around Tk101 crore. The project is expected to create approximately 3,000 direct jobs.
Under the proposed agreement, the private partner will pay a monthly concession fee of Tk12.92 lakh, which will increase by 3% every three years. It will also pay a one-time development fee of Tk75 lakh and provide a Tk2.50 crore performance security.
The government will retain ownership of the land and allow its long-term use rather than selling it. No fresh government investment will be required for restarting, modernising, operating or maintaining the mill.
Despite the potential benefits, questions remain over the financial terms of the long-term PPP arrangements. Although four companies collected tender documents for the projects, only one ultimately submitted a bid, limiting the scope for determining a competitive market price.
The government has increased concession fees through negotiations, but details of independent assessments of land-use value, expected private investment and the projects’ economic returns have not been made fully public.
Textiles and Jute Secretary Sharif Uddin Ahmed Chowdhury said the projects were prepared in accordance with existing laws, regulations and PPP guidelines. He said competitive tendering, technical and financial evaluations, and subsequent negotiations were followed in finalising the proposals.
If approved and successfully implemented, the projects are expected to revive idle government assets, increase industrial production, create employment and stimulate local economies without putting a major new investment burden on the government.
