Capital injection urged to revive Nepal Drugs
KATHMANDU, AUG 28 -
The Public Enterprises Board has recommended injecting private capital to revive the non-operational Nepal Drugs Limited. The state-owned drugs manufacturer has been closed for the last three years for lack of money, and the government has been paying the salaries of its 282 employees.
A report prepared by the board after making a two-month long study of Nepal Drugs stated that the company cannot be revived through government efforts alone. “We found that Nepal Drugs cannot operate well without the private sector getting involved in its operation,” said Bimal Wagle, chairman of the board.
The report has suggested a number of ways to bring private sector investment, like giving the company on lease, handing over the ownership or management and bringing in strategic partners. The report, which was submitted to the Ministry of Finance two weeks ago, has also recommended not making further investments in the company until the government decides whether to revive it or close it down permanently.
Similarly, the report has recommended adopting proper measures to reduce the financial burden the government has been suffering. “Though the government has been providing tens of millions of rupees to the company annually, it has born no fruit at all,” said an official of the study team. He added that the government should first pay off Nepal Drugs staffers to cut losses. “If the government keeps propping up the company like it is doing presently, the financial burden will only start swelling,” said Wagle.
The factory has been incurring losses since 2004-05, and its cumulative loss amounted to Rs 560 million as of fiscal 2010-11. Its net worth is negative by Rs 450 million, according to the Finance Ministry’s report. Established four decades ago, Nepal Drugs (formerly Royal Drugs) is the country’s oldest pharmaceutical company and used to manufacture allopathic drugs. It went belly up due to political intervention and mismanagement.
Source: The Kathmandu Post
