Unfunded liabilities of public enterprises land in govt’s lap

KATHMANDU, JUL 18 -

Many public enterprises (PEs) have not made arrangements to pay the retirement benefits of their employees and have been passing such unfunded liabilities to the government.

According to Annual Performance Review of the PEs 2014, the unfunded liabilities of these state-owned entities have been ballooning and reached Rs 26.96 billion as of fiscal 2012-13. If contingent liabilities are added, the total comes to Rs 41.65 billion. Such unfunded liabilities amounted to Rs 21.20 billion in fiscal 2011-12.

PEs are required to arrange funds for gratuity, retirement benefits, medical treatment, insurance and unused leave when their employees retire, and when they don’t do so the responsibility eventually lands in the government’s lap. The Annual Performance Review said that such unfunded liabilities should be controlled.

Among the different categories of PEs, public utilities have the largest share of unfunded liabilities worth Rs 20.75 billion. All three organizations under this category — Nepal Electricity Authority (NEA), Nepal Telecom (NT) and Nepal Drinking Water Corporation (NDWC) — have piled up huge liabilities .

The NEA has the largest liability of Rs 14.08 billion, NT comes second with Rs 6.22 billion and NDWC’s liabilities amount to Rs 438 million. There are a total of 9,015 employees in the entities under this category. The NEA and NDWC both have been running up cumulative losses.

The liabilities of PEs related to the industrial sector amount to Rs 3.3 billion, according to the report. There are 2,609 employees in the PEs in the industrial category. All seven PEs under this category have cumulative losses.

As far as the trading sector is concerned, the unfunded liabilities come to Rs 825.1 million.

They have 1,939 employees and three out of the six public enterprises under this category have been incurring cumulative losses.

In the service sector, the seven PEs had unfunded liabilities worth Rs 501.6 million as of fiscal 2012-13. Nepal Airlines Corporation has the largest liability of Rs 446.7 million from among the PEs under the service sector. There are a total of 2,708 employees and two among the PEs have been incurring cumulative losses.

As far as the social sector is concerned, there are unfunded liabilities worth Rs 672.7 million. Gorkhapatra Sansthan has the largest liability of Rs 510 million. There are a total of 1,902 employees in the PEs under this category.

In the financial sector, Rastriya Banijya Bank has unfunded liabilities of Rs 914.7 million while Deposit and Credit Guarantee Corporation has liabilities worth Rs 400,000, according to the report. Rastriya Banijya Bank also has contingent liabilities worth Rs 9.13 billion.

The other PEs under this category dos not have such liabilities . There are a total of 6,296 employees working in the PEs under this category. Only one out of the nine institutions in this category has been incurring cumulative losses.

Performance review of the PEs

Fiscal Year    Unfunded liabilities

2008-9       Rs 95.44b

2009-10    Rs 13.63b

2010-11    Rs. 16.84b    

2011-12    Rs 21.20b

2012-13    Rs 26.96b

Source: The Kathmandu Post