The latest move indicates the government is keen on keeping its control over all state-owned enterprises rather than letting the private sector play the lead.[break]
Currently, the government has initiated the process of finding strategic partners for Nepal Telecom and Agriculture Development Bank Limited. “We are interested in bringing in institutional investors in other public enterprises as well. This could be in the form of joint venture or public-private partnership,” Khum Raj Punjali, joint secretary at the Ministry of Finance, told Republica.
The government launched the privatization drive almost two decades ago with the aim of promoting the private sector and creating a lean government that solely focused on playing the role of a regulator. The government, at that time, also believed bringing in the private sector to operate state-owned enterprises would enhance their performance, as most of them were riddled with problems due to weak management.
Since then, the government has privatized 30 state-owned enterprises. Among them, shares of 11 public enterprises were sold to the private sector and three each saw their assets completely or partially sold or extended on lease to the private sector. Of the rest, 10 were liquidated, two were dissolved and one was handed over to the private sector on management contract.
These numbers show that the government, in the past, was equally focused on pursuing every privatization option that the law permitted.
“But lately the government has discovered that the private sector has failed to enhance performance of enterprises that were handed over to them. This has encouraged the government to keep these units under its wings by finding strategic partners,” a senior finance ministry official told Republica on condition of anonymity.
One of the primary reasons behind the decision to bring in strategic partners, or institutional investors, according to the official, is that they can inject much-needed capital in public enterprises, most of which are heavily indebted.
But this may be easier said than done as most of the public enterprises are known as playgrounds of politicians, who use the platform to appoint people based on personal relationship rather than merit.
“We hope this problem will soon be solved as the recently-formed Public Enterprises Management Board has initiated the process of selecting qualified chiefs and board members of all state-owned firms through open competition,” the official said.
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