Three years on, 76% of Savar tanneries yet to pay Tk150cr plot fees to Bscic

Three years past the deadline, around 76% of tanneries in Savar's Tannery Industrial Zone have yet to fulfil their payments for the plots allotted by the Bangladesh Small and Cottage Industries Corporation (Bscic) for factory setup. 

The Bscic completed the project in 2021, with tanneries relocating from Dhaka's Hazaribagh to Savar expected to settle their land payments by that time.

According to Bscic, overseeing the industrial estate, 121 out of 162 tanneries are yet to settle land lease agreements, collectively owing Tk150 crore for their allotted plots' value.

A Bscic official, wishing not to be named, told TBS that the project was completed three years ago, with the deadline for completing the lease deed being extended multiple times since then. Tannery owners were cautioned that unregistered plots could be revoked, yet they did not heed the warnings. 

Tannery owners who missed the original registration deadline were subject to a 5% interest charge. But the interest charge has been waived now to encourage owners to go for speedy registration.

"The Bscic has once more extended the plot registration deadline till 24 May with an interest-free registration facility," the official said, adding that tanneries will face strict consequences for non-compliance this time.

Shakawat Ullah, the general secretary of the Bangladesh Tanners Association (BTA), told TBS, "Many owners have not yet settled the deed amount owing to financial constraints."

"Additionally, there was previously no policy regarding plot ownership transfer. Now a policy has been introduced," he said, expressing optimism that everyone would register within the specified timeframe.

When pressed about the reason behind owners' failure to pay for the plots despite the interest-free registration facility, the BTA general secretary responded, "I will investigate the issue. Those who have not registered will be encouraged to do so."

When tanneries operated in Dhaka's Hazaribagh, their waste was discharged into the Buriganga River, severely contaminating it. To protect the river, the Savar Leather Industrial City was constructed to relocate all tanneries. 

Bscic developed the industrial estate spanning 199 acres along the banks of the Dhaleswari River at a cost of over Tk1000 crore. It comprises 205 plots, with 162 tanneries allocated various plot sizes, ranging from 10,000 sqft to 300,000 sqft. 

The land in Savar Industrial City was initially priced at Tk1,700 per sqft but was later reduced to Tk499 per sqft at the request of tannery owners. However, despite the lower price, tannery owners, who were supposed to pay it upon project completion, failed to do so.

According to Bscic officials, the project was implemented with a loan from the Ministry of Finance. Upon project completion, the borrowed funds were meant to be repaid along with a 5% interest rate. 

However, Bscic is now facing hurdles in reimbursing the money to the government as a majority of tannery owners remain non-compliant on plot payments. No action has been taken so far.

BCIC officials told TBS that the business environment was adversely affected by the pandemic in 2020, compounded by the Russia-Ukraine war later. Consequently, many did not proceed with land registration. At that time, tannery owners requested a waiver of the 5% interest on payments. The interest has been waived now, but the owners are not showing any eagerness for registration.

On 30 July last year, the Standing Committee on the Ministry of Environment, Forest, and Climate Change recommended temporarily halting the production of tanneries that failed to complete registration.

The Ministry of Environment had previously recommended the suspension of operations of tanneries in Savar as the estate's central effluent treatment plant (CETP) was not fully functional.

Although the Bscic project was officially declared completed in 2021, the CETP remained partially operational. Subsequently, a separate company was established to oversee the management of the CETP.