Last month, the PAC, a parliamentary body, had offered different prescriptions to different state-owned enterprises to enhance their overall performance and efficiency.[break]
For instance, three enterprises -- National Construction Company, Nepal Engineering Consultancy Service Centre and Timber Corporation -- were asked to be dissolved as they were only adding financial burden on the government. Other enterprises like Agricultural Materials Company Ltd and National Seeds Company were asked to undergo merger as operation of similar companies as two stand-alone entities was only increasing the overhead cost of both the firms.
Even profit making companies like Nepal Telecom were prescribed to be operated under the public private partnership (PPP) model as lack of autonomy was eroding its competitive edge in a market dominated by private players.
The suggestions were laid based on observations made during visits to public enterprises and meetings held with experts, government secretaries and top executives of the state-owned firms, according to the latest report of the PAC.
Such a step from the government was long overdue as most of the public enterprises are suffering crippling losses because of inefficiency, mismanagement, shortage of skilled manpower and unnecessary political intervention.
Som Bahadur Thapa, secretary of the PAC, told Republica that this was too much. “We can´t continue to pour money into these enterprises despite knowing they would not improve and give us any return,” he said.
The government currently operates 36 public enterprises.
So far it has funneled Rs 231.9 billion in them, mostly to cover losses incurred by these firms.
“To avert the situation of footing the losses made by these enterprises, we now have only two options at hand: either shut them down or give a facelift, so that they would not be liabilities to the government,” Thapa said.
The government very well knows it cannot shut down all loss-making enterprises at once because of their role in maintaining social stability, and fears of belligerent opposition from trade unions that could up their ante against the ruling parties. Thus the prescriptions.
The PAC has proposed that eight public enterprises, including Civil Aviation Authority, Oil Corporation and Food Corporation be kept under government control as their privatization could threaten national and social security. It has also recommended merger of 11 enterprises and conversion of two state-owned media organizations into companies so that they would have more autonomy.
On top of that, another 11 enterprises, including Hetauda Cement, Udaypur Cement, Nepal Airlines Corporation and three state-owned commercial banks, have been asked to be operated under the PPP model, while Dairy Development Corporation and Nepal Drinking Water Supply Corporation have been asked to operate as a cooperative and community-based organization.
“We have already asked the line ministries of these enterprises to send us proposals to implement the recommendations accordingly,” said Ram Saran Pudasaini, joint secretary of Finance Ministry, which coordinates with all the public enterprises.
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