High-level committee for Public Enterprises privatization

High-level committee for Public Enterprises privatization
eKantipur.com, Jan 17, 2007

The government has formed a high-level committee to provide impetus to the stalled restructuring process of loss-making public enterprises, and expedite the privatization process of closed state-owned companies.

The seven-member committee, led by Dr Bhola Chalise, has currently been entrusted with the task of providing necessary recommendations to this extent by May.
Based on suggestions offered by the team, the government will finalize the privatization modality for different liquidated firms and decide on whether to close and sell, or continue operation of the loss-making enterprises, stated a document of Ministry of Finance.

The high-level committee was constituted as per the announcement made through the budget speech, considering the deteriorating financial health of almost all of state-owned enterprises (SOEs).

Of the 36 companies run by the government, performance of very few, like Nepal Telecom (NT) is commendable. Most of the public enterprises (PEs) are operating on loss and only increasing financial burden on the state.

According to latest statistics, the government had received a mere Rs 3.35 billion in dividends from the entire PEs in 2004/05 as against Rs 59.68 billion equity and Rs 64.55 billion loan investment it made. Of the total earning it made in that year, 98.5 percent or Rs 3.3 billion had come from a single institution, namely NT.
It is widely stated that problems of overstaffing, inefficiency and incompetent management are major problems that are plaguing PEs.

The committee will identify core causes that led to the fall of public companies and recommend whether it would be profitable for the government to continue running these enterprises or liquidate them, said the document.

It will also suggest restructuring measures that need to be introduced on some of the enterprises that have been classified as 'companies providing essential service' to the public.