The decline in the capacity utilization of dry syrup, electric wire, cable, concrete, rice, beverages, GI pipe, and pharmaceutical production industries led to a decline in the average capacity utilization of the industries in Lumbini Province.
Except for the rosin and paper industries, all the other major industries’ production has declined in this fiscal year. Among the industries included in the study, the production of rosin increased by 30.66 percent compared to the same period last fiscal year. The easy availability of raw materials and high demand in other countries including India helped the increment of rosin production. Paper production surged by 30.59 percent in the first half of FY 2022/23, particularly due to the increased demand for Nepali paper. Lumbini Province has been at the center of Nepal’s cement production. However, cement production in the province declined by 54.09 percent in the current fiscal year. “Cement production decreased mainly due to a decline in demand, problems in electricity supply, and a surge in prices of coal and petroleum products in the international market,” reads the report. Out of the 60 cement industries operating in Nepal, 45 are in Lumbini province. According to NRB, while there is a demand for clinker and cement produced from Lumbini Province in the Indian market, there has been a decrease in the production of cement, clinker, and rods during the review period due to a lack of ease in exports, obstacles in limestone mining and lack of internal demand. The NRB study shows the production of aluminum decreased by 65.47 percent, rice production by 58.79 percent, concrete production by 52.09 percent, electric wires, and cables by 48.64 percent, wheat flour by 36.31 percent, tablet by 29.39 percent, noodle by 16.59 percent, dry syrup by 19.49 percent, liquor by 10.95 percent, and capsule by 10.33 percent. Meanwhile, the disbursement of loans by banks and financial institutions (BFIs) to the industrial sector increased marginally in the first half of FY 2022/23. The BFIs’ loan disbursement to industries increased by 6.09 percent to Rs 126.03bn in the first half of the current fiscal year compared to a growth of 4.43 percent during the corresponding period of FY 2021/22. According to NRB, of the total loans, Rupandehi district has the highest share of 58.92 percent while Rukum East district has the lowest share of 0.03 percent. In the review period, the BFIs’ loans to mining industries surged by 194.15 percent, the electricity sector by 191.10 percent, and the agriculture sector by 0.58 percent. The share of the industrial sector in total loans is 22.91 percent.