MoF less keen to launch VRS in troubled PEs
KATHMANDU:
The Ministry of Finance (MoF) is not keen about launching voluntary retirement schemes (VRS) in financially-troubled state-owned enterprises, as it has found that the practice of partially cutting off workforce only squanders away taxpayers’ money, without helping companies to revive their health.
This stance taken by the MoF is likely to affect state-owned enterprises like Nepal Drugs Ltd and National Trading Ltd that are seeking funds to launch VRS.
“VRS is actually meant for competitive enterprises that wish to streamline their workforce by cutting off excess employees. It’s not meant for companies that are struggling to stay afloat even after years of absorbing huge government funds,” said Ram Sharan Pudasaini, head of the Corporation Coordination Division at the MoF, which looks over all public enterprises (PEs) in the country.
In this regard, the MoF is mulling over introducing compulsory retirement schemes at financially-troubled PEs, so that the government does not have to continue injecting funds in them to keep them barely alive.
“Once we lay off all the staff of troubled PEs, we can think of operation modalities such as roping in the private sector to run those companies,” Pudasaini said.
The statement made by Pudasaini is expected to ruffle some feathers at Ministry of Industry (MoI), which is seeking to revive all PEs.
To begin with, the MoI has already sought a fund of Rs 149 million to resume operation of Nepal Drugs Ltd (NDL) and another Rs 370 million to launch VRS for employees there.
But the MoF is not interested in resuming operation of the state-owned pharmaceutical company.
“Injecting around Rs 150 million won’t help the company become competitive. The money would soon disappear and it would come knocking on the doors of MoF within a year seeking additional funds,” Pudasaini said. “How long can we pour financial resources like this?”
One of the reasons why the MoF is not interested in resuming operation of NDL is because of widespread practice of extending ‘commissions’ in pharmaceutical sector to attract customers, which NDL cannot provide due to its ‘state-owned’ status.
Other state-owned companies also face similar problems. But the major problems are overstaffing, political interference, troubles caused by trade unions, frequent change in board members and chief executives, and lack of strong leadership.
Due to these problems, PEs like Nepal Railway Company, Herbs Production and Processing Centre, National Productivity and Economic Development Centre, among others, demand millions of rupees every year just to pay salaries of staff.
In a nutshell
• MoI seeks to revive all public enterprises
• Industry ministry has asked for Rs 149 million to resume operation of NDL and Rs 370 million to launch VRS for its employees
• MoF says practice of partially cutting off workforce only squanders away taxpayers’ money, without helping companies to revive their health
• Finance ministry mulling over introducing compulsory retirement schemes at financially-troubled PEs
Source: THT
