Nepal Drug's VRS plan hits snag

KATHMANDU, Dec 22: The government´s plan of launching voluntary retirement scheme at Nepal Drugs Limited (NDL) has hit a snag after employees demanded exorbitant amount to part ways with the state-owned drug producer.



A proposal forwarded by the NDL management to the Ministry of Finance (MoF) shows employees had asked for amount equivalent to five years of salaries apart from other regular financial incentives they receive from the government.[break]



If five-year equivalent of salary is given to each staff as demanded, the government will end up paying Rs 600,000 to the lowest-ranking official, while the highest-ranking official will take home Rs 1.46 million, an MoF official told Republica.



“They have also asked for gratuity amount equivalent to four months of salaries for employees who have completed 15 years of service,” he said. “In total, the government will have to pay Rs 579.1 million.”



The government, on the other hand, has said it cannot afford to pay the amount. “We can give them only Rs 207.2 million,” the official said. “And we have told this clearly to the management.”



The government is keen on retrenching a large chunk of the workforce at the financially-troubled NDL, as it is compelled to pay Rs 4 million every month to cover salaries of staff members who have not been working for the last three years. These staff members have been consuming tax-payers money ever since the company was forced to shut down its production unit by the Department of Drug Administration (DDA).



At that time, the drugs regulator had asked the company to either revamp its production unit or shut it down citing that it failed to meet the Good Manufacturing Practice (GMP) standard -- a set of guidelines developed by the World Health Organization -- that among others outlines production aspects so that companies do not compromise on quality while manufacturing drugs.



So far, this standard has not been met. But even if it is met, it will have to cut down 70 percent of the workforce of 279 as they lack the required academic qualification - of high school (SLC) degree - to work at a GMP-compliant pharmaceutical company.



“We wanted to cut down the workforce because of this reason,” the official said. “But their demands are impractical. Yet, we have asked the concerned ministry and the management to negotiate.”



Amidst this confusion, the MoF recently agreed to give a sum of Rs 50 million to the troubled company to partially restart its production.



“The amount will be used to purchase raw materials and revamp facilities like water treatment plant and heating ventilator cum air control system so as to meet minimum requirement set by the DDA to start manufacturing 20 drugs like paracetamol and amgit, and oral rehydration solution,” Navin Kumar Jha, general manager of the NDL, told Republica.



But even then the revenue generated by the company will not be sufficient to pay salaries of staff members, Jha confessed, giving hints that there is no alternative to laying them off under the voluntary retirement system.

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