Govt to formulate policy for management of individual PEs

The government is formulating a policy on management of individual state-owned enterprises in the country, incorporating the option of liquidating loss-making enterprises that do not have future prospects and are turning into liabilities for the state.
"The draft policy on the verge of finalization will have guidelines on management of individual public enterprises (PEs)," a high-ranking official of the Ministry of Finance (MoF) told Republica on condition of anonymity. "The policy will also categorically prescribe every PE to either operate in a professional manner or go for liquidation."
The PEs established in the 1970s and the 1980s have been inflicting huge losses on the government due mismanagement and overstaffing. "This is the time to take a clear line on their future course," the official said, declining to divulge details of the policy and treatment each PE is likely to receive. He only said: "Discussions are still underway on what to do with each PE."
Currently, only 14 of the total of 37 PEs in the country are generating profit, according to the MoF´s Economic Survey 2011/12. The rest are inflicting losses to the tune of Rs 1 billion per year on the government.
In many cases, the government has even been forced to pay workers of PEs that are not in operation due to delay in introduction of voluntary retirement schemes and pressure from political parties to keep them open. One of such PE is Janakpur Cigarette Factory, where around 900 workers are employed. Another such PE is Nepal Drugs Limited, where the government is pouring around Rs 4 million per month to pay workers.
The government had earlier decided to manage PEs through the PE Board, established last year. At the time of its establishment it was said the Board would take the lead in recommending reform measures to the government to enhance the performance of all PEs. It was also said the Board would also be responsible for prescribing suitable restructuring models for troubled PEs, such as merger, public private partnership or liquidation, among others, to enhance their efficiency.
However, the Board´s role so far has been restricted to appointment of chief executives of different PEs through open competition.
"Although the finance ministry generally does not intervene in the Board´s work, we will ask it to make decisions based on the policy," the official said.
Giving examples of inconsistency of the government´s decisions about the management of PEs, the official said that every government has its own vested interest with regards to operation of PEs. "In most cases, political parties have used PEs as a platform to feed their cadres," the official said.
The policy will offer clear guidelines on operation of PEs and their modality of operation, the official said.