PEs log loss of Rs 1.25 billion

May 28, 2018

My Republica, 28 May 2018

Although the government has embraced the policy of privatization, it has been increasing its investment in public enterprises. 

The increment in public enterprises by the government goes against its principle of not pouring in fresh capital in loss-making entities. 

According to Financial Status of Public Enterprises - 2018, the government invested fresh Rs 38 billion in public enterprises in Fiscal Year 2016/17. Total investment of the government in public enterprises stood at Rs 312 billion at the end of FY2016/17, a rise of 13.87 percent compared to Rs 274.75 billion a year earlier.

Although the government is increasing its investment in public enterprises, it is not getting returns on its investment. Returns from these investments fell by 0.4 percent in FY2016/17 compared to a year earlier, according to the report.

Nepal Electricity Authority, Civil Aviation Authority of Nepal (CAAN) and Nepal Telecom have received a combined 72 percent of the government’s total investment in public enterprises. Of its total investment of Rs 312 billion, these three public enterprises have received Rs 224.69 billion.

According to the report published by the finance ministry on Sunday, 11 public enterprises, including Janak Education Materials Center (JEMC), Dairy Development Corporation (DDC), Nepal Water Supply Corporation, Nepal Drugs Limited (NDL) and Nepal Orind Magnesite Ltd, posted a combined loss of Rs 1.25 billion in FY2016/17. Timber Corporation of Nepal Limited, National Productivity and Economic Development Center Ltd, Cultural Corporation, Nepal Television and Rastriya Awas Company Limited are logged loss in the review year.

JEMC, Dairy Development Corporation, Nepal Drinking Water Corporation and Nepal Drugs Limited have accumulated loss of Rs 2.7 billion, Rs 549.9 million, Rs 1.20 billion and Rs 1.44 billion. 
According to the ministry, only a few loss-making entities have brought about improvement in their management. 

A total of 26 enterprises posted a combined profit of Rs 42.68 billion in FY2016/17. Nepal Telecom, Nepal Oil Corporation, Nepal Bank Limited, Rastriya Banijya Bank Limited (RBBL) and Agricultural Development Bank Limited (ADBL) were among the top earners in the review year.

According to the report, NT earned profit of Rs 76.33 billion, while Nepal Oil Corporation profited Rs 10.88 billion. Similarly, three state-controlled commercial banks -- Nepal Bank Ltd, RBBL and ADBL – have posted profit of earned Rs 2.3 billion, Rs 1.98 billion and Rs 347.9 million, respectively. 

The report concludes that the overall performance of public enterprises was not satisfactory in FY2016/17.



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