PEs borrow Rs 1.06b in 10 months

KATHMANDU, April 20: Public Enterprises (PEs) borrowed over Rs 1.06 billion from the government in the first ten months of fiscal year 2009/10, surpassing the budgetary allocation of Rs 800 million.



Most of the recipient PEs are loss-making entities that have either been dissolved or are making new investment in a bid to continue their existence.[break]



Tanka Mani Sharma, joint secretary at the Ministry of Finance, told Republica that the allocation of such a huge amount is the indicator of increasing burden of ailing PEs on the government. “Though some PEs are using the government borrowing in profitable investment, a large chunk of the fund has gone in unproductive sector,” Sharma said.



MoF provided Rs 260 million to Janakpur Cigarette Factory (JCF), Rs 60 million to Nepal Industrial Development Corporation (NIDC), Rs 40 million to Nepal Aushadhi Ltd (NAL), Rs 1 million to Orient Magnesite Ltd (OML), Rs 100 million to National Trading Ltd (NTL) and Rs 30 million to Nepal Transport and Warehouse Management Ltd (NTWML) as government borrowing. Likewise, it distributed Rs 950,000 to Nepal Metal Company (NMC), Rs 280 million to Biratnagar Jute Mill Ltd (BJML), Rs 472.2 million to Butwal Dhago Factory (BDF), Rs 22.1 million to Gorakhkali Rubber Factory (GRF), Rs 11.5 million to Herbs Production and Processing Company (HPPC) and Rs 76 million to Nepal Electricity Authority (NEA) as government borrowing till mid-April.



The trend of PEs knocking government doors for financial help is increasing, according to the officials. PEs are left with no option but to approach the government for financial help as they have been facing burgeoning loss due to their inefficiency to compete in the market.



Sharma said most of the borrowings were made to pay for administrative costs, including salary of the workers. However, NTL had borrowed the amount for share investment, NTWML for improving warehouse facilities and GRF for repaying loan and to acquire shares owned by Asian Development Bank.



“The government can no longer run unprofitable PEs. This is why are gradually taking decisions on the fate of all PEs,” Sharma said, adding, “We are at the final stage of working out modalities to revive NMC and OML.”



NMC and OML are running under Public Private Partnership (PPP) model. The government has 75 percent stake in OML and owns 71.3 percent shares in NMC.

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