As per the policy of reviving closed PEs announced in the budget for the current fiscal year, the government has already invested over Rs 300 million to the sick public enterprises (PEs), majority of which are financially not viable.
According to officials of the Ministry of Finance, MOF has released nearly Rs 90 billion during the current fiscal year to bring the Hetauda Textile Factory back into operation. The factory, which was established in mid-seventies under the Chinese financial and technical cooperation, was shutdown in 2002 amid mounting losses and shrinking market share. “The government is in the process of disbursing additional Rs 21 million to clear power dues owned by the factory,” said Tej Ranta Shakya, joint secretary of the MOF.
Similarly is the case for Gorakhkali Tire Factory, in which the government share in the factory has lately increased to 80 from last year´s 20 percent. “Addition investment of Rs 50 million and conversion of past loans worth Rs 360 million into equity shares has raised government´s share of the factory to 80 percent,” Shakya said.
According to the concerned officials, the government has adopted a three-stage plan to bring the factory back in full-fledge operation to ensure its financial sustainability. The first-stage that will focus on maintenance and repairing of the factory, will end by coming mid July,” said the official and added that the two years long second phase will basically focus on modification and commercialization of the factory.
Likewise, the government has so far invested Rs 30 million to restart the production at Agricultural Tools Factory which has been closed for last six year. The factory, which was privatized in mid-nineties, was retaken by the government the private party failed to clear its financial terms and condition agreed with the government.
Similarly, Biratnagar Jute Factory, one of the most problematic factories run by the government, has already received Rs 80 million and negotiations are on with the management of the factory for additional disbursements, said an official. The government has share equity of 46 percent in the factory.
A high level committed formed by the government in 2006 recommended the government not to make additional investments to the sick PEs in the names of running capital, shares and loans. The committee also underlined that the there was no alternative to the privatization of the PEs and suggested the government initiate a new round of privatization by forming a separate privatization bureau at the Prime Minister´s Office.
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