According to officials, three state-owned firms -- Janak Educational Materials Center (JEMC), Nepal Railway Company (NRC) and Nepal Metal Company (NMC) - have demanded Rs 581.1 million from the finance ministry. [break]
In the previous years, most of the ailing PEs used to ask for financial support halfway through the fiscal year. JEMC has asked for Rs 550 million citing fund crunch to print books, officials said. NRC and NMC have demanded that the government provide them Rs 29.4 million and Rs 1.7 million, respectively.
“PEs have started demanding for financial support even though the fiscal year is only into the third month. It is not a good indication,” Janmajaya Regmi, chief of PEs Coordination Division at MoF, told Republica. “It is, however, natural for the PEs to demand financial support from the government toward the end of the fiscal year if they face severe financial problems.”
Though the government has spent billions of rupees, as financial support and investment, in PEs, some of them are not in a position to sustain themselves leave along providing return to the government. “How can we expect returns form the PEs that are seeking financial support for survival?” wondered Regmi.
Janakpur Cigarette Factory (JCF), which is virtually defunct, has also demanded Rs 28.4 million to manage its assets. The government has already decided to shut down the factory by paying off its staffers. The finance ministry has already released around Rs 1.75 billion to clear salary dues and other liabilities of JCF.
Though the MoF has permitted the company to retain 20 staffers, majority of who are security guards, the company had forwarded a proposal to retain 81 employees. For the purpose, it has demanded Rs 28.4 million from the government.
“We have instructed the JCF management to retain 14 security guards and six administrative staff. We don´t think the demand to retain 81 employees is justifiable,” the official added.
According to MoF, only 15 out of 37 PEs posted profit in 2011/12. In 2010/11, 21 PEs had logged profit. The government has privatized 30 public undertakings so far. Of them, five are operating in profit.
An MoF report shows that the government has invested over Rs 182 billion, including Rs 92 billion as share investment, on PEs.
“The rate of return from PEs is negligible when we calculate cumulative loss of all PEs combined,” the official added.
The government got only around 5 percent return from PEs during 2011/12.
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