State-owned Public Enterprises: 27 Running in Profit; 16 Facing Loss, Two Shut Down

The Annual Status Review Report, 2083 unveiled by the government today has revealed mixed state of affairs of Public Enterprises or PEs in the country.

Though some PEs have earned profound profits and generated revenue to the government, a large number are still operating at a loss, owing to weak management, financial indiscipline, and structural crises.

According to the report, currently 45 public enterprises are operating in Nepal in industrial, commercial, service, social, public utility, and financial sectors. Twenty among them are fully government-owned, while the government has majority ownership in 25 PEs.

The establishment of PEs is considered to have started in 1936 BS (1979 AD) with the Biratnagar Jute Mills coming into operation.

Institutions established with the objectives of planned development, expansion of basic services, infrastructure construction, maintaining price stability, and supporting the private sector now are seen struggling to maintain their own existence.

The report stated that the total assets of PEs increased by 9.49 percent, reaching Rs 3206.91 billion in the fiscal year 2081/82. Compared to the previous year, the government’s investment also increased by 13.44 percent, reaching Rs 798.56 billion.

Although the data shows that government investment is continuously increasing in PEs, it is evident that the corresponding returns have not materialized. Total income of PEs, according to the report, reached Rs 721.14 billion during the review period.

Total operating income of PEs stood Rs 7,24 billion. However, compared to the previous fiscal year, total income has increased by only 0.67 percent and operating income by only 0.66 percent.

The report shows that the contribution of total income of PEs to the gross domestic product (GDP) is 11.80 percent and the contribution of operating income is 10.85 percent.

Among the currently operating PEs, 27 are profitable while 16 are operating at a loss. The net profit of PEs has increased by 12.03 percent, reaching Rs 45.08 billion. Public enterprises that are profitable have earned a net profit of Rs 48.89 billion, whereas the total net loss of institutions operating at a loss is Rs 3.80 billion.

According to the report, the profit of PEs increased by 10.58 percent, while the loss of PEs operating at a loss decreased by 4.14 percent.

In terms of accumulated profits, Nepal Electricity Authority, Nepal Telecommunications Company Limited, and Civil Aviation Authority of Nepal are at the forefront while the Nepal Airlines Corporation has the highest accumulated loss.

The report has drawn a conclusion that PEs are grappling with crisis due to unclear objectives, lack of competitive capacity, operational inefficiency, political interference, and weak management.

The report has clearly indicated the need of a clear strategy to classify PEs and decide where the government should involve and in which sectors the private entities to be promoted. (RSS)