National Trading Limited plan to sell land hits roadblock

KATHMANDU, MAY 15 -

The plan of National Trading Limited (NTL) to sell its prime land at Teku and raise cash to diversify its business portfolio has run aground with its board failing to reach a consensus . Two government entities, Nepal Telecom (NT) and the Insurance Board (IB), have expressed interest to purchase the 18-ropani plot located at a key business location in downtown Kathmandu.

State-owned NTL has planned to raise Rs 1 billion by selling the land at Teku where its central office, sales outlets and warehouses are located. The cash-strapped trading company said it would use the money to expand its business.

“Though the Cabinet and the Finance Ministry have given their go-ahead to sell the land, there has been no consensus among the board members,” said NTL general manager Pramila Yadav. She added that the board had not been able to move ahead with the sale due to opposition by one of its members representing the Ministry of Commerce and Supplies.

Yadav said that frequent changes in the Commerce Ministry’s representative on the board had also hindered the company from reaching an agreement on the proposed sale. “The ministry has changed its board member four times in one year,” she said. Delays in selling the land will lead to NTL becoming bankrupt, she added.

Meanwhile, NTL has formed a three-member committee under the coordination of its deputy general manager Dilli Dhoj Karki to negotiate a deal with prospective buyers. However, the committee has not been able to function.

NTL owes Rs 700 million in loans including Rs 150 million to the Finance Ministry. According to Yadav, 80 percent of the money received from the land sale will be used for business diversification.

The company is currently operating as the authorised distributor of state-owned Udaypur Cement and Hetauda Cement. It is also involved in importing and selling sugar.

However, Commerce Ministry secretary Lal Mani Joshi denied that the ministry had been preventing NTL from selling its land. “As per the company’s request, we have already given our okay to sell the land,” he said.

According to Commerce Ministry officials, the reason NTL has not been able to sell its land is that Commerce Minister and Finance Minister Shankar Koirala is not happy with the idea. “The minister has been asking for alternative plans to revive NTL’s financial health,” said a ministry official.

Secretary Joshi said that the land selling process can only proceed with the minister’s consent. “I have requested the minister to either manage funds for NTL or let it sell its land,” he added.

“The minister has promised to settle the issue by holding a meeting with stakeholders.”

Last year, the government had given NTL permission to sell its prime real estate on the condition that it be sold only to state entities. As per a Cabinet decision made in June 2010, public enterprises cannot sell their fixed assets to parties other than those under state control.

With the enforcement of the Public Procurement Act that forbids state-owned companies from getting directly involved in purchasing goods, NTL’s business has been limited to selling a few items. The company, which used to sell a range of imported machinery and commodities, is now only dealing in liquor, sugar, cement, and petroleum products.

Source: The Kathmandu Post