Tannery owners are set to start relocating hazardous factories from Hazaribagh in Dhaka to Savar by the end of March.
“At least 25 companies will be the first to begin constructing factories in Savar,” said M Abu Taher, chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters' Association.
Tanners have decided to start the relocation taking the environmental issues into consideration and hoping to boost exports, he told The Daily Star by phone yesterday.
Taher made the commitment after a meeting with the industries and environment ministers at the industries ministry.
In the meeting, Industries Minister Amir Hossain Amu directed Chinese joint venture company—JLEPCL-DCL—to resume construction of the central effluent treatment plant in a week, as CETP is a key element for tannery relocation.
“We will take punitive action against the constructor of CETP, if it delays work,” said Amu.
Currently, the Chinese company that got the work in March 2012 has stopped constructing the CETP due to a lack of drawing plan and scarcity of fund.
As per the contract, JLEPCL-DCL had been scheduled to install the plant within 15 months at a cost of Tk 477.46 crore at the under-construction Savar Leather Industrial Park. But the company missed the deadline.
The government has already appointed the Bureau of Research, Testing and Consultation of Bangladesh University of Engineering and Technology as a consultant to oversee the construction of the tannery industrial park, said Taher of the association.
“Pollution of tanneries has almost made the Dhaka City unlivable,” said Anwar Hossain, environment minister.
Bangladesh faces a deadline to cut tanneries' toxic pollution by the year-end, to be able to continue leather or leather goods exports to European countries, according to Hossain.
A total of 82 tannery owners have so far submitted factory layout plans to Bangladesh Small and Cottage Industries Corporation, the implementing agency. And BSCIC has so far approved 35 plans, according to industries ministry.
Taher also urged the government to provide long-term loans with less than 5 percent interest to expedite the relocation.
Tanners will have to invest around Tk 7,500 crore to relocate the factories, establish new plants and begin commercial production, he said.
“We need soft loans to relocate the tanneries as leather is a capital-intensive industry,” Taher said, adding that many will have to fold their businesses if the government does not arrange the financing.
BSCIC has already developed the leather estate with spacious roads and adequate fire-fighting capacities and equipment.
The industries ministry has already allocated more than 205 plots on 200 acres to 155 tannery owners through BSCIC, a wing of the ministry.
The project, which took off in 2003 at an approximate cost of Tk 175.75 crore, came to a standstill over a decision on who would bear the lion's share of the cost and get the contract for a common effluent treatment plant.
Initially, it was planned that the 155 tanneries would finance 60 percent of the cost and the government the rest.
However, it was decided that the government would bear 80 percent of the core project cost of Tk 829 crore, as per the second revised proposal passed by the Executive Committee of National Economic Council in August last year.
The total project cost since the launch has shot up to Tk 1,079 crore, including the Tk 250 crore that will be paid in compensation by the government to the tanneries.
The government now intends to complete the relocation by 2016. The industry earned $980.67 million last fiscal year by exporting leather, leather products and footwear, up from $765.03 million in 2011-12, according to the Export Promotion Bureau.