Government revives Nepal Drugs Ltd
KATHMANDU, May 18:
Homework for the privatization of Nepal Drugs Limited among other half a dozen public enterprises were completed last year and the ministries of finance and industry were only waiting this government to take the final decision to execute the plan.
But the decision a cabinet meeting took on Friday on state-run enterprise took them by surprise.
The government decided instead to revive the public enterprise though many important issues including the operating model and mechanism are yet to be worked out.
Undersecretary at the Ministry of Industry Bishnu Prasad Dhakal confirmed the decision, and added, “Our ministry will work out the operating modality now.”
Asked why the government did U-turn on the public enterprises, he argued that the decision was taken basically in a bid to supply free of cost medicines through the state-run health institutions to ensure affordable and quality medicines to the people.
However, multiple sources criticized the decision as “confused mentality”. Even some government officials, insisting anonymity, said that it seems that the state has not learnt a lesson - following futile effort to run jute mills in Biratnagar.
The last technocrat government, in which Shankar Koirala was both Finance and Industry Minister, had decided to propose privatization of the public enterprise.
Sources said that incumbent Industry Minister Karna Bahadur Thapa was adamant about reviving the public enterprise despite opposition from some other senior cabinet members including Finance Minister Dr Ram Sharan Mahat.
Minister Mahat, who had initiated the privatization of some of the companies in 1990s, is of the view that though the privatized companies have not been able to operate well, they had saved the bleeding of exchequer.
A bad trend with almost all the state-run enterprises is that they have become costly for the government as it has to pay salary to the employees though they hardly generae any money.
Earlier, a study panel had recommended the government to either privatize or lease the assets of Nepal Drugs Limited to private party.
It had also urged the government to clear the payments of the employees and implement voluntary retirement system (VRS) by selling some of its assets, if required.
The enterprise had pulled its shutters two years back failing to comply with standards of World Health Organization. There are about 200 employees paid without any jobs since its closure. It had a glorious history as its production was of the best quality and popular among the public.
Sources also quoted Minister Thapa as saying that the enterprise should be able to generate quality supply for the state purchased medicines for mainly Department of Drugs Management and public hospitals.
However, some officials argue that the enterprise, even though revived, can hardly supply medicines worth Rs 200 million, which is in peanuts against its total annual procurement of medicines worth Rs 30 billion.
Dhakal also said that the possible modality to operate the enterprise will be ´management contract´ so that the management will itself appoint by hiring new and efficient staff after downsizing the size of existing employees through VRS.
The government needs to pump in a huge amount of resources to equip the enterprise well to meet the WHO standard and hire efficient manpower.
Critics say that the enterprise will be the latest ´white elephant´ for the government.
Economist Bishwambher Pyakurel, however, welcomed the decision cautiously. “It is justified to rehabilitate the enterprise at this point, but the government should eventually plan to hand it over the private sector once it comes into operation.”
There are 37 public enterprises in the country.
Source: Republica
