While the government and the private sector agree privatized public enterprises are the responsibility of both the parties, both at times polarize on certain issues and engage in bitter discussions.[break]
For instance, when the private sector fully acquires public enterprises from the government, businessmen think they have the prerogative over such units and demand full control over the property. The government also thinks in the same line but it attaches conditions.
One such case is that of Bhrikuti Paper Factory. The factory was bought by the Golchhas for Rs 229.8 million in 1992. But when they tried to sell part of factory´s land, the government intervened and asked them to suspend the process.
“The government actually should not interfere in such matters as businessmen who have paid full amount for the asset should have the right to decide on what to do with the property,” said Basu Sharma, under secretary at the finance ministry´s privatization cell, at a program held in the Ministry of Finance on Wednesday to review the status of privatized public enterprises.
However, the government does not want to buy the argument of Sharma, whose tone was commensurate with that of the private sector. It says the sole objective of privatizing public enterprises was to keep the unit running and not let anyone benefit from the rise in price of real estate. “This is what the Privatization Act says,” government officials said, although they acknowledged contracts signed with parties to whom assets were sold do not mention such clauses.
The problem faced by the Golchhas is just the tip of the iceberg, as the government´s privatization program, which took off with the aim of promoting the private sector and creating a lean government that focused on regulatory works, is riddled with problems.
The government has privatized 30 state-owned enterprises so far, of which 11 saw their shares sold to the private sector and three each saw their assets completely or partially sold or extended on lease to the private sector. The rest were either liquidated (10), dissolved (2) or handed over to the private sector on management contract (1).
Although few of these enterprises, like Bansbari Shoe Factory have been shut down because of incompetent management, others that are open are facing one form of problem or the other.
Nepal Tea Development Corporation (NTDC), manufacturer of Tokla and Soktim brands of tea, for instance, is another firm suffering from government apathy.
The government had privatized NTDC in 2000, under which 65 percent of the shares in the tea company was sold to Triveni Group for Rs 267 million. The privatization deal also included leasing of 5,196 acres of land to the tea company for a period of 50 years for Rs 4 million per year.
“But since the time of privatization the company has only been able to use around 67 percent of the land given on lease, as the rest have been encroached by squatters,” Subash Sanghai, chairman of NTDC, said at the event. “We have complained about it time and again but nothing has been done yet.”
Bhaktapur Brick Factory is another privatized public enterprise that is facing problems.
“The government has roped us in the VAT network, whereas other brick kilns are not paying the tax, which makes our product expensive,” an official of the factory told the meeting.
Said Sharma: “The government should act immediately as privatization program cannot yield positive result without support of the private sector.”
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