The Bahrain Flour Mills Company's planned new flour mill will now cost BD14 million ($37 million) up from BD12 million earlier due to shift in location because of policy changes, the company's chairman has said.

Yusuf Al Saleh told the Gulf Daily News (GDN), our sister publication on the sidelines of the company's annual general meeting yesterday that the project was initially supposed to come up at Mina Salman but has now been delayed due to the port's transformation into the Salman Naval Base.

"We were supposed to launch it at the start of the year," he said.

"The board is now communicating with the relevant government agencies for an alternative location, which will most likely be Khalifa Bin Salman Port, to build the new mill facilities and relocate the operations," he said.

The new mill will have a total capacity of 600 tonnes per day in addition to service, operational and storage facilities.

The company reported a net profit of BD219,275 for last year, when compared with BD788,388 for 2012, a decline of 72 per cent.

The company's general manager Mohammed Abdul Wahab Nass said negotiations were currently underway between the management and the Finance Ministry on upward revision in the price fixing compensation.

"There are two issues here, first is the subsidy model mandated by the government for the provision of bread to the public, practically free of cost," he said.

"Then there is the price fixing compensation that the company is given to enable it to sell products at a controlled price fixed by the government," he added.

"The government pays for the overall price of wheat and the operational cost. For the past few years, the operation compensation has not been elevated sufficiently to meet the higher costs of labour, materials and also inflation," he said.

"What we are saying is that either there needs to be a corresponding escalation in compensation or the model of subsidy needs to be revised," he added.

The compensation claimed is calculated as the difference between the actual cost of wheat plus BD31 per tonne of wheat sold for all other related costs and the sales of flour during the year.

According to Nass, the company's operational cost is nearly BD37 per tonne.

The board recommended dividend payment of BD248,325, representing 10pc of paid-up capital, was approved by shareholders during the meeting. – TradeArabia News Service