The government has initiated the privatization process for public enterprises after a gap of almost two decades. The government, under the leadership of Prime Minister KP Sharma Oli, plans to privatize at least eight enterprises.
A meeting of the previously inactive privatization committee formed by the government decided Monday to recommend a proposal to the Council of Ministers for the classification of several enterprises as closed, ailing, and underperforming institutions before initiating the process for their privatization. The meeting was chaired by Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel.
The meeting decided to recommend a proposal for the classification and privatization of Janakpur Cigarette Factory, Nepal Metal Company, and Hetauda Textile Industry. Additionally, the meeting also recommended the classification of Biratnagar Jute Mills, Butwal Yarn Factory, Gorakhkali Rubber Industry, Udayapur and Hetauda cement factories.
According to Finance Ministry spokesperson Mahesh Bhattarai, after the classification by the Council of Ministers, a study committee with experts will be formed to evaluate the assets and liabilities of those institutions. Based on the recommendations from the experts, the government will initiate the process for privatization.
The process of privatizing government enterprises started in 1993, following the adoption of an economic liberalization policy. It continued until 2006. The government, at that time, had institutionalized the process of privatization, dissolution, and liquidation of enterprises from 1994 with the aim of enhancing the efficiency of institutions, increasing productivity, reducing administrative and financial burdens on the government, and increasing the participation of the private sector to improve service delivery.
The government halted the privatization process after 2006. Since the leftist forces, who previously opposed privatization, have remained in power, no public enterprise has been privatized since 2006, when Nepal Rosin and Turpentine Industry was privatized.
However, continuous mismanagement and political appointments turned public enterprises into recruitment centres, preventing them from operating properly. Although the government has made announcement while unveiling the annual budget to resume some enterprises, these plans have not materialized. The current government has now taken the policy of privatizing a few public enterprises that have remained shut.
Janakpur Cigarette Factory, Nepal Metal Company, Hetauda Textile Industry, Biratnagar Jute Mills, Butwal Yarn Factory, and Gorakhkali Rubber Industry have been either closed or ailing for a long time. Udayapur and Hetauda cement factories have been operating at a loss with weak performance levels.
According to the 'Annual Status Review of Public Enterprises 2024', a total of 26 public enterprises under the government made a profit of Rs 48.51 billion in the last fiscal year. Out of 44 public enterprises, 15 were operating at a loss, and three had zero business transactions. In fiscal year 2021/22, there were 44 public enterprises, of which 25 were profitable and 17 were in loss.
Entities with majority ownership under government control are considered public enterprises. Under this practice, there are 10 industrial enterprises, four commercial, 11 service-based, five social, five public utilities, and nine financial enterprises.
The review highlights that industrial enterprises are generally operating at a loss, with a total loss of Rs 1.48 billion in this sector. Commercial enterprises, on the other hand, have recorded a profit of Rs 11.81 billion.
