Going by the new law, the government should now hand over complete responsibility of managing, supervising and regulating public enterprises (PEs) to the PE Management Board, freeing them from the grip of different ministries.[break]
The decision to form the body has received the backing of major political parties.
The separate body was envisaged mainly because politicians at the helm of the ministries turned PEs into a playground for appointing their political aides and cadres.
"Sadly, such political interventions over the years have turned PEs, in which billions of rupees have been injected, into liabilities for the government. Hence, we mooted a separate body to look over the activities of PEs in order to prevent this anomaly," said Prime Minister Baburam Bhattarai, expressing commitment to publish the Order in the gazette soon.
Once the PE Management Board is formed, it will take the lead in recommending reform measures to the government for enhancing the performance of all PEs -- a task, which at present is being handled by line ministries of respective state-owned firms.
The board will also be responsible for making suitable policy prescriptions such as merger, public-private partnership or liquidation, among others, to enhance the efficiency of PEs. It will also develop indicators to evaluate the performance of PEs and its employees, and design guidelines on appointment of staff members.
The government currently operates 36 public enterprises, which include cigarette manufacturing and cement industries, telecom company and media houses.
However, most of these enterprises are incurring losses despite getting more than Rs 231 billion from the state coffers over the years.
One of the main reasons for the deteriorating performance of these PEs is political intervention in appointment of chiefs of these state-owned firms, which is done not on merit basis but on personal relationship of politicians.
To solve this problem, the board will take the lead in selecting qualified people for the post of chief executive of every PE through open competition.
"To make the selection process transparent, we have developed four indicators -- personal qualification and experience, quality of business plan, face-to-face interview and leadership capacity -- which have been given different weightages," PM Bhattarai said at a meeting of the Public Accounts Committee of parliament.
The score of each applicant will be tallied by a five-member committee, formed under the chairmanship of the Public Service Commission´s chief or someone appointed by him. The committee will then forward the names of the three best applicants to the government for final approval.
"The performance of chief executives of PEs will be evaluated every year based on the firm´s profit margin ratio, equity to liability ratio, and ratio of administrative cost on total operation cost, among others," the order says.
The order also says the members of the board of directors of PEs and even the chief of the board will be appointed through open competition. But it remains silent on how the chairman of the PEs´ board of directors will be selected.
However, politicians have warned the government´s ambitious plan of bringing all PEs under one umbrella may not materialize as it has failed to annul the constitutions of individual enterprises.
"If the constitutions, which guide the PEs, are not scrapped immediately, they will overlap with the order. Under such circumstances, those who are against reforms may move the court against it, forcing the government to drop the plan of forming the body," former Finance Minister Surendra Pandey told Republica.
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