The government currently operates 36 public enterprises from cigarette and cement industries to telecom and media companies. But most of these enterprises are incurring losses despite getting more than Rs 231 billion from the state coffer over the years.[break]
Last week, Prime Minister Baburam Bhattarai announced the Public Enterprise Management Board (Formation and Operations) Order a week ago to pave way for establishment of a separate body, with authority to regulate and oversee management of the country´s state-owned enterprises.
Currently, different PEs have their own constitution based on which decisions ranging from appointment of employees to managing day-to-day works are taken.
“Under such circumstances, PEs would not prefer to have another set of laws to guide them.
And, if the government decides to push them, they will simply move the court, demanding the order to be revoked,” a senior official at the Ministry of Finance (MoF) told Republica.
If the government wins the case there´d be no problem, he continued. “But if the government loses, it will derail the government´s ambitious plans of handing over complete responsibility of managing, supervising and regulating state-owned enterprises to the PE Management Board.” Hence, the need for the new law.
Khum Raj Punjali, joint-secretary at the Ministry of Finance, told Republica that the new Act will “basically overwrite all the laws that are currently guiding the PEs”.
“Once it is enforced, the new law will be supreme and existing constitutions of individual PEs will not have any legal weight,” Punjali said, explaining the law is “essential for proper implementation of the PE Management Board Order”.
Upon formation of the board, it will take the lead in recommending reform measures to the government to enhance the performance of all PEs - a task, which at present is being handled by line ministries of respective state-owned firms.
The board will also be responsible for prescribing suitable restructuring models for troubled PEs such as merger, public private partnership or liquidation, among others, to enhance their efficiency. It will also develop indicators to evaluate the performance of PEs and form committees to appoint chiefs of all PEs and board members through open competition.
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