- 30 Public Enterprises – privatized
- 12 Public Enterprises – liquidation
- 11 Public Enterprises – Share Sell
- Krishi Usajr Company has been handed over to the National Innovation Center for re-operation
- 3 Public Enterprises – Asset + Business sell
- 3 Public Enterprises – Asset + Business lease
- 1 – Management contract
Provatization in Nepal started after the restoration of multiparty democracy in 2046 (1990 AD). In order to carry out privatization, the Privatization Act 2050 is in operation, but 3 public enterprises were privatized before the enactment of this act.
As of the yellow book 2082, thirty (30) PEs have been privatized under different modalities. Out of them, 12 PEs have been decided for liquidation. Only the Agreeculture Lime Industry has been completely liquidated legally.
The Agriculture Input Industry has been re-operated from the cabinet decision of 2079, where the National Innovation Center is working to re-run this industry. (Now it is partially running).
Rest pf the other 10 enterprises are in the process of liquidation.
Similarly, 11 PEs are privatized under the modality of the sale of shares. Out of which 3 are closed.
8 of the PEs are operating in profit.
3 of the PEs are privatized by the complete sale of the business and assets, and they are closed.
The 3of the other PEs are privatized under asset sale and rent. Among them, 1 is operating in profit, 1 is in loss, and 1 is closed.
Similarly, one of the PEs is privatized under the management contract, which is closed (i.e., Biratnagar Jute Mill).
This shows that Nepal has privatized the PEs using different modalities.
Against the principle of privatization for improving efficiency and productivity of the enterprise, 12 are liquidated, but only 1 of them has been completely liquidated.
Some of the enterprises are in the closing stage after privatization, and some are running in loss, while some of them are operating in profit.
This shows the mixed results of privatization.
Benefits of Privatization in Nepal
- Reduced the fiscal and administrative burden of the government.
- Expansion and development of the private sector.
- Increased government revenue from both the sale of shares and assets.
- Improved efficiency and competitiveness of the enterprise.
- Better utilization of the resources of the enterprise.
- Improved the quality of the product and competitiveness of the enterprises.
- Support for developing the capital market.
- Promotion of the market economy or the private sector.
- Improved the responsibility and professionalism of the private sector.
- Improved focus of the government on the strategic and priority sectors.
Problems of Privatization in Nepal
- Politically debatable and a lack of political consensus.
- A slow and time-consuming process of privatization.
- Lack of clarity among the stakeholders regarding privatization.
- Lack of transparency and accountability in privatization.
- Unable to attract a reputed corporate house in privatization.
- Lack of post-privatization policies.
- Mismatch between the objective of privatization and the interests of the private sector involved. (e.g. हरिसिद्धि टायल तथा इँटा उत्पादन गर्न छोडेर घर जग्गा प्लातिंग प्लटिङ्ग गर्न थाल्यो)
- Poor consultation, interaction, and participation of the stakeholders.
- Policy inconsistency in privatization.
- Unable to communicate and convince the people about the rationale of privatization.
Q) Privatization GOOD or BAD in Nepal?
- Privatization is an economic, political, and social issue, and so it should be examined based on the existing constitutional and legal provisions, the economic policy and practices, and the regional and global trends.
- So, privatization in Nepal should also be assessed from these perspectives to decide whether privatization is good or bad.
- The constitution of Nepal has envisioned the development of a socialism-oriented national economy, which demands a certain role of the government through public enterprises.
- It means the PEs that offer the basic goods and services for the masses, such as the public utilities (drinking water, drainage management, food managemenet….. etc) should be taken care of by the government.
- If such services are fully privatized, they may be unaffordable to the masses, so the government can continue to run such PEs.
- Similarly, the constitution itself has accepted three pillars economic policy (तिन खम्बे आर्थिक नीति), where the private sector is considered to be the major pillar of the economy.
- So, the government should promote the private sector, which demands privatization of the PEs, which can be run for pure profit.
- The regional and global practices also support the privatization argument, and Nepal has also practiced privatization since the early 1990s with some good results.
- So, we cannot deny privatization in Nepal. However, there are lots of issues of privatization such as:
- Politically debatable and a lack of political consensus.
- A slow and time-consuming process of privatization.
- Lack of clarity among the stakeholders regarding privatization.
- Lack of transparency and accountability in privatization.
- Unable to attract a reputed corporate house in privatization.
- Lack of post-privatization policies.
- Mismatch between the objective of privatization and the interests of the private sector involved. (e.g. हरिसिद्धि टायल तथा इँटा उत्पादन गर्न छोडेर घर जग्गा प्लातिंग प्लटिङ्ग गर्न थाल्यो)
- Poor consultation, interaction, and participation of the stakeholders.
- Policy inconsistency in privatization.
- Unable to communicate and convince the people about the rationale of privatization.
So, the government should develop a master plan through effective interaction and consultation with the stakeholders to develop a common consensus on privatization (साझा सहमति) and determine the priority appropriate modality with adequate transparency and accountability in the whole process of privatization.
Q) Privatization if good or bad in the context of Nepal?
Privatization is an economic, political, and social issue, and so it should be examined based on the existing constitutional and legal provisions, the economic policy and practices, and the regional and global trends. So, privatization in Nepal should also be assessed from these perspectives to decide whether privatization is good or bad.
The constitution of Nepal has envisioned the development of a socialism-oriented national economy, which demands a certain role of the government through public enterprises.
It means, the PEs that offer the basic goods and services for the masses, such as the public utilities (drinking water, drainage management, food management), etc., should be taken care by the government.
If such services are fully privatized, they may be unaffordable to the masses. So, the government can continue to run such PEs.
Similarly, the constitution itself has accepted three piller economuc policy where the private sector is considered to be the major pillar of the economy.
So, the government should promote the private sector, which demands privatization of the PE,s which can be run for pure profit.
The regional and global practices also support privatization argumenet and Nepal has also practiced privatization from the early 1990s with some good results. So, we cannot deny privatization in Nepal. However, there are lots of issues of privatization, such as:
- Lack of transparency
- Lack of common consensus among the stakeholders.
- Inconsistency and instability in policy.
- Lack of clarity.
- Poor public support for privatization.
- So, the government should develop a master plan through effective interaction and consultation with stakeholders to develop a common consensus on privatization and determine the priority, appropriate modality, with adequate transparency and accountability in the whole process of privatization.