PE Board conducts studies of all public enterprises

KATHMANDU:

The Public Enterprises Board has started conducting comprehensive study of all 37 state-owned enterprises so as to get an update on their performance and identify problems faced by them.

The outcome of the study is expected to be helpful while introducing reforms in these firms and formulating policies on public enterprises, and privatisation of state-owned firms.

“The study will basically ascertain the present status of the public enterprises, their prospects and their financial standing. It will also identify problems faced by the state-owned firms,” PEB chief Bimal Wagle said, expressing hope that ‘the document can later be used as a reference while framing policies on state-owned enterprises’.

Currently, most of the state-owned enterprises are known as sink for public funds as most of them only demand funds from the government without giving any return. As of fiscal year 2011-12, the government’s share investment in 37 public enterprises stood at Rs 769.19 billion. In all these years the government has also extended credit of Rs 898.44 billion to these firms. Despite extension of all these funds, the financial health of most of the public enterprises is not in a good shape and more than half of them are operating in losses.

In the fiscal year 2011-12, 37 public enterprises suffered a net loss of Rs 3.50 billion, with net loss of Nepal Electricity Authority and Nepal Oil Corporation standing at Rs 9.95 billion and Rs 9.53 billion, respectively. The only state-owned firm that is doing exceptionally well so far is Nepal Telecom, which generated a net profit of Rs 11.60 billion in 2011-12. But the telecom company is also losing many customers to private cell phone operator, Ncell.

Some of the reasons for deteriorating condition of public enterprises are bad governance, political interference in appointment of chief executives, inefficiency and overstaffing.

Every government that comes to power promises to deal with these problems effectively. But in the end they turn out to be no more than cheap talk, as they only form committees after committees and never implement their recommendations. Due to this inaction, the government is losing billion of rupees every year.

To address these problems, the government around three years ago formed a semi-autonomous body called Public Enterprises Board to regulate and oversee management of all state-owned enterprises. But after it came into operation it was not allowed to do much and was limited to recommending names for the post of chief executives at various state-owned enterprises.

Source: THT