PAC tells govt to dissolve three PEs
KATHMANDU, Oct 12:
A parliamentary committee has recommended that the government dissolve at least three public enterprises (PEs) that have been deemed to be of ´no use´ to the state and whose performance has been deteriorating every year.
In its latest report, the Public Accounts Committee (PAC) has suggested that the government permanently close down National Construction Company, Nepal Engineering Consultancy Service Centre and Timber Corporation of Nepal.
Of the three public enterprises, Nepal Engineering Consultancy Service Centre has remained dysfunctional for the last seven years. The company was established with the aim of providing opinion to the government on matters related to engineering, but has been out of work because of lack of demand for its services.
In spite of this, 12 employees are still in the company´s payroll. The liability created by the unproductive workforce coupled with other administrative costs led the company to incur a net loss of Rs 3.02 million in the fiscal year ended mid-July 2010.
National Construction Company was another state-owned enterprise which was in the red in the last fiscal year. The company, which was set up to assist the government in building physical infrastructure and work as a project-cost moderator, had generated a net loss of Rs 17.9 million during the year.
Because of its inability to generate profit, the government had decided to dissolve the company in the fiscal year 2005/06. But the government formed after the People´s Revolution of 2006 decided to keep the company operational by initiating reforms. A new business plan was later submitted by the company but it has not been endorsed till date.
“Considering its performance, which is not as efficient as that of private companies, the PAC has once again recommended the government to scrap the company, as it does not make sense to add liability on the government by running a loss-making entity,” Som Bahadur Thapa, secretary of the PAC, told Republica.
He, however, emphasized these were just suggestions and the process of permanently closing down the enterprises should be initiated by the line ministry of each company.
The PAC has also recommended that the government dissolve Timber Corporation of Nepal. The company, which has been supplying timber to furniture and construction companies, has been bleeding largely because of mismanagement.
A committee formed some five years ago had said that the corporation´s balance sheet was not in order and had categorized it as one of the public enterprises in ´critical financial condition´.
However, unlike the two other enterprises, it had generated a net profit of Rs 221.9 million in the last fiscal year. The government had decided to dissolve it largely because of its cumulative loss totaling Rs 215.04 million.
Currently, 36 public enterprises are operating in the country and many of these firms have holes punched in their balance sheets. To cover losses incurred by these enterprises, the government has so far funneled Rs 231.9 billion to them.
“The government can´t keep on pouring money into these enterprises…. It´s like pouring water in the sand,” Thapa said, referring to an old Nepali adage.
Source: Republica
A parliamentary committee has recommended that the government dissolve at least three public enterprises (PEs) that have been deemed to be of ´no use´ to the state and whose performance has been deteriorating every year.
In its latest report, the Public Accounts Committee (PAC) has suggested that the government permanently close down National Construction Company, Nepal Engineering Consultancy Service Centre and Timber Corporation of Nepal.
Of the three public enterprises, Nepal Engineering Consultancy Service Centre has remained dysfunctional for the last seven years. The company was established with the aim of providing opinion to the government on matters related to engineering, but has been out of work because of lack of demand for its services.
In spite of this, 12 employees are still in the company´s payroll. The liability created by the unproductive workforce coupled with other administrative costs led the company to incur a net loss of Rs 3.02 million in the fiscal year ended mid-July 2010.
National Construction Company was another state-owned enterprise which was in the red in the last fiscal year. The company, which was set up to assist the government in building physical infrastructure and work as a project-cost moderator, had generated a net loss of Rs 17.9 million during the year.
Because of its inability to generate profit, the government had decided to dissolve the company in the fiscal year 2005/06. But the government formed after the People´s Revolution of 2006 decided to keep the company operational by initiating reforms. A new business plan was later submitted by the company but it has not been endorsed till date.
“Considering its performance, which is not as efficient as that of private companies, the PAC has once again recommended the government to scrap the company, as it does not make sense to add liability on the government by running a loss-making entity,” Som Bahadur Thapa, secretary of the PAC, told Republica.
He, however, emphasized these were just suggestions and the process of permanently closing down the enterprises should be initiated by the line ministry of each company.
The PAC has also recommended that the government dissolve Timber Corporation of Nepal. The company, which has been supplying timber to furniture and construction companies, has been bleeding largely because of mismanagement.
A committee formed some five years ago had said that the corporation´s balance sheet was not in order and had categorized it as one of the public enterprises in ´critical financial condition´.
However, unlike the two other enterprises, it had generated a net profit of Rs 221.9 million in the last fiscal year. The government had decided to dissolve it largely because of its cumulative loss totaling Rs 215.04 million.
Currently, 36 public enterprises are operating in the country and many of these firms have holes punched in their balance sheets. To cover losses incurred by these enterprises, the government has so far funneled Rs 231.9 billion to them.
“The government can´t keep on pouring money into these enterprises…. It´s like pouring water in the sand,” Thapa said, referring to an old Nepali adage.
Source: Republica
