KATHMANDU, JUL 15 -
Most of the Public Enterprises (PEs) have turned out to be white elephants for the state. Despite huge investment from the government, their returns have been minimal.
Of the 37 PEs, only three—Nepal Telecom (NT), Industrial Estate Management Limited (IEML) and Nepal Housing Finance (NHF)—have offered dividend to the government. The government received Rs 5.48 billion from NT, while IEML gave Rs 6.3 million and NHF Rs 1.4 million. “This amount stands at just at just 5.96 percent of the government’s investment in PEs,” states the Annual Review of the Public Enterprises 2012, released by the Finance Ministry on Saturday.
According to the report, the government has invested Rs 95.16 billion as shares and loans in PEs as of 2010-11.
PE Board Chairman Bimal Wagle said the government has not been able to benefit from PEs despite huge investment.
Although 21 out of 37 PEs made profits last year, their cumulative losses barred them from providing dividend to the government. “PEs that are incurring cumulative losses cannot provide dividend to shareholders,” said Wagle.
According to the review, 14 PEs are incurring net loss as of last fiscal year, while two—Hydroelectric Investment and Development Company and Nepal Engineering Consultancy Service Centre—have not done transactions.
Last year, net profit of the entire the PEs stood at Rs 6.67 billion—a decline from Rs 10.55 billion in 2009-10.
The report said huge losses incurred by Nepal Electricity Authority (Rs 6.09 billion) and Nepal Oil Corporation (Rs 5.11 billion) were the major reasons behind low profits last year. PEs contributed just 2.75 percent to last year’s revenue collection of Rs 200 billion.
Political intervention and weak management have long been blamed for poor performance of PEs. Wagle said managerial deficiencies were the major problems in PEs. “Such a situation has arisen due to political intervention,” he said.
In order to address the dearth of competent management in PEs, the government formed the Public Enterprise Board to select competent chief executives and board directors for PEs. Although it had started selecting candidates for the top PE jobs, the Election Commission barred it from doing so to ensure compliance of the election code of conduct.
The report also said pressure tactics used by trade unions demanding salary hike contributed to PEs’ failure in providing goods and services to the people.
Source: http://www.ekantipur.com/2012/07/15/business/majority-of-pes-make-sluggish-returns/357178/
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