The government has moved forward with its ‘privatisation’ plans. 

It aims to handover the operation of the eight ailing public enterprises to the private sector. However, the ownership of their assets would remain public, according to government officials.

Past disputes at the Bansbari Leather and Shoe Factory and the Bhaktapur Paper Factory—both of which were privatised along with their land—have prompted officials to take a different approach this time.

Dirgha Raj Mainali, Joint Secretary at the Ministry of Finance, said  that while the government was open to leasing the old industries to private operators, it will not sell off the land.

“If there is a possibility of the languishing public industries being operated by the private sector, the government can allow leasing of land and equipment,” Mainali told NBA. “However, the ownership of the assets cannot be transferred by selling the government property.”

Mainali noted that while some institutions are currently slated for ‘privatisation’, the government can also lease out other institutions to the private sector.
 
The government has been conducting thorough studies on the current state of such enterprises and exploring operational modalities before calling for proposals.

“After determining the modalities, we will call for proposals,” said Mainali, adding that operational responsibilities would be assigned with conditions set by the Cabinet.

The liabilities of the old industries which are no longer in operation have risen significantly, with valuable properties and machinery deteriorating. 

So, the government is looking towards the private sector for solutions to revive such enterprises. However, with the Madhesh government currently operating from the building of the Janakpur Cigarette Factory, the federal government appears hesitant to implement its plans anytime soon.

Read: Govt Initiates Privatisation Process for Eight Public Enterprises

The process of privatising government enterprises started in 1993, following the adoption of an economic liberalisation policy, aiming to  enhance institutional efficiency, productivity, alleviate its administrative and financial burden, and improve service delivery through greater private sector involvement. But, it has remained stalled for nearly two decades. 

A week ago, on October 21, the Privatisation Committee, led by Finance Minister Bishnu Paudel, decided  to recommend the privatisation classification of several industries including Janakpur Cigarette Factory, Nepal Metal Company, Hetauda Textile Industry, Biratnagar Jute Mill, Butwal Yarn Factory, Gorakhkali Rubber Industry, and Udayapur and Hetauda cement factories.

After the classification, a study committee with experts will be formed to evaluate the assets and liabilities of those institutions, according to Mahesh Bhattarai, spokesperson at the Finance Ministry. “Based on the recommendations, the government will initiate the process for privatisation.”

Bimal Wagle, former Chairman of the Public Enterprises Management, warned that privatisation without a thorough study could lead to significant losses for the government.

“A detailed assessment of the condition of the assets at these enterprises is must before making any decision,” said Wagle.