Public enterprises post net loss of Rs 3.49b
KATHMANDU, JUL 13 -
Public enterprises (PEs) suffered a net loss of Rs 3.49 billion in the fiscal year 2011-12 with most of these state-owned corporations going into the red. In the previous fiscal year, the 37 PEs in the country earned a net profit of Rs 6.58 billion.
According to a status report made public by the Ministry of Finance on Friday, only 15 PEs operated in the black in fiscal 2011-12. One of the government entities, Nepal Engineering Consultancy Service, did not conduct any transactions that year.
Speaking at the unveiling ceremony, Finance Minister Shankar Prasad Koirala said that the eight PEs that had earned a profit in the previous fiscal year went into the red in fiscal 2011-12.
Meanwhile, an expert on PEs and chairman of the Public Enterprises Board Bimal Wagle said that he was not surprised by the loss-making PEs because the profits they had made in the past were not sustainable. “PEs making a profit for two-three years despite having a huge cumulative loss cannot be termed good PEs,” he added.
All the PEs under the industrial category suffered losses in the last fiscal year although three of them had earned a profit in the previous year. “This clearly shows the government’s inability to run industrial enterprises,” said Wagle.
The government has recently paid off the staff of Janakpur Cigarette Factory and is considering doing the same at Nepal Drugs Company as both of them went bankrupt.
The government will need to spend more than Rs 2 billion to pay off the workers at Janakpur Cigarette. Many other loss-making PEs, particularly Nepal Oil Corporation and Nepal Electricity Authority, have been taking money from the government to pay their staff and remain in operation.
The government has had to dole out ever larger amounts of cash not only to keep the PEs afloat but also to pay retiring employees as they have made no arrangements for a retirement fund.
The state exchequer may have to pay Rs 25.93 billion in retirement benefits for fiscal 2011-12. Such payments amounted to Rs 16.83 billion in the previous fiscal year, according to the report. PE staff get gratuity, retirement benefits, medical expenses, insurance and payment for leave when they retire.
“It is the job of the board of the PEs to decide how much money to set aside for the retirement fund,” said Wagle. “Not being able to maintain an adequate retirement fund is the fault of the government as it appoints the board members.”
The report has commented that the PEs have been increasing the amount of facilities for the staff under pressure but the decision makers at the PEs have not been mindful of their financial status. “This has resulted in greater liability which the PEs cannot bear,” stated the report.
The government has invested Rs 203.64 billion including shares and loan investments in the state-owned enterprises. However, the dividends they have paid amount to Rs 6.26 billion which is 6.1 percent of the total investment, according to the report.
Meanwhile, only 21 out of the 37 PEs have completed their auditing as of the last fiscal year, while three PEs—Rastriya Beema Sansthan, Udaypur Cement Factory and Nepal Orind Magnesite—have not had their transactions audited for the last eight years.
Source: The Kathmandu Post
