Two decades on, liquidation of PEs yet to complete

KATHMANDU, DEC 30 -

Liquidation of about a dozen public enterprises (PEs), which began two decades ago, is yet to be completed.

From Nepal Jute Development and Trading Company to Nepal Drilling Company, whose liquidation started in 1993 and 2006 respectively, liquidation of all the PEs is in limbo.

Government officials and experts say a hasty decision to liquidate the PEs without an alternative mechanism to manage the property and failure to maintain a timeline for liquidators resulted in the lengthening of the process.

Since 1993, the government has decided to liquidate 11 PEs, but the process of none f them has completed so far, Finance Ministry said. Although the liquidator submitted details about the property of the Cottage Handicraft Sales emporium, it is yet to be liquidated formally, it said.

The Company Act has talked about appointing a liquidator for a certain period and extending the deadline for just a reasonable period, but the deadlines have been extended haphazardly. As a result, the government has been losing money for liquidator’s fees and costs involved keeping the PEs’ property under liquidation.

“Liquidators, who were appointed long ago, are coming to Finance Ministry demanding fees even now,” said Basu Sharma, under secretary at the ministry’s privatisation cell. He said the ministry has not calculated the amount spent for liquidators and security of the property as it “requires a thorough calculation”. Sharma said the ministry has stopped extending the deadline for the liquidators since last year.

In the case of PEs with liabilities, there are risks that government will have to pay the creditors with interest.

After the PEs failed to make profits and turned to be a burden for the government, the latter decided to liquidate them. “As long as the objective of the liquidation is not clear and an alternative is not in sight, it is better not to take any PEs into liquidation,” said Sharma. Court cases involving several of the PEs have further complicated the situation. Cases against Himal Cement and Agriculture Input Factory, among others, are preventing the sale of their property.

Public Enterprise Board chief Bimal Wagle said the liquidation process has been a failure. He said the lack of strong commitment on the government’s part and continued follow-up of the progress made by the liquidators resulted in the failure. “After liquidation process failed to move ahead under the liquidators from outside the government services, we even appointed joint secretaries of the government as liquidators in some PEs,” said Wagle.

PEs under liquidation

Enterprises     Liquidation started

Nepal Jute Dev and Trading Co    1993

Tobacco Dev Co     1994

Agriculture Project Service Centre    2001

Himal Cement Industry    2002

Cottage Handicraft Sales Emporium    2002

Nepal Coal Limited    2002

Hetauda Textile Industry    2002

Birgunj Sugar Factory Ltd    2003

Agriculture Inputs Factory Limited    2003

Agriculture Lime Industry Limited    2006

Nepal Drilling Company    2006

Source: The Kathmandu Post