E-Kantipur

KATHMANDU, DEC 10 -

The Ministry of Industry (MoI) has sought Rs 5 billion for long-term management of six public enterprises (PEs) under it in response to a request by the Ministry of Finance (MoF) to provide detailed proposals for their reform.

The Finance Ministry had asked for proposals from all the ministries in October, however, only the MoI has submitted its proposal.

The MoI has formulated short- and long-term solutions for Nepal Drugs, Janakpur Cigarette Factory, Orind Magnesite, Nepal Metal Company, Gorakhkali Rubber Industry and Biratnagar Jute Mill. “The MoI has estimated an outlay of Rs 5 billion for the long-term solution of these PEs,” said Khum Raj Punjali, joint secretary at the Finance Ministry. The MoI has also suggested multiple options to reform the PEs.

The MoI has recommended four alternatives including running by the government, going through a cooperative model, handing over the management as a contract and privatization in the case of Nepal Drugs. Although the MoF had asked the ministries to provide suggestions based on the recommendations of the parliamentary Public Accounts Committee (PAC) and various other studies, the ministry has not considered PAC’s suggestions.

Nepal Drugs had suggested rightsizing the number of employees, stopping political intervention and arranging the operational cost. Meanwhile, PAC has suggested merging it with Nepal Medicinal Herbs Production and Processing Company.

For Nepal Drugs, which is not operational at the moment, the MoI has sought more than Rs 1 billion including Rs 570 million for a voluntary retirement scheme (VRS) and Rs 530 million for running capital, according to a senior official of the MoF. “With the arrangement of operation cost, the Industry Ministry says Nepal Drugs can produce 18-20 items of drugs,” said the MoF official.

Regarding Janakpur Cigarette Factory, which has been in the red for the last few years, the government has given first priority to bringing it back into operation, according to the MoF official. However, the MoI has insisted on rightsizing its staff.  The MoI sought about Rs 1 billion for VRS and operating cost. “The MoI seeks to increase the retirement benefits for those choosing the benefits,” said the MoF official.

The factory had suggested ending politicization, effective management, product diversification and wastage management. PAC has, however, suggested the modality of operating it under public private partnership by increasing the paid-up capital and floating 25 percent of the shares for the people of Janakpur.

Regarding Orind Magnesite, the MoI has suggested multiple options including management contract, privatization and running it by the government itself. PAC has, however, suggested operating it under pubic private partnership after its restructuring.

The MoI has a similar proposal for Nepal Metal Company which has also remained dysfunctional. “The MoI has sought Rs 180 million to Rs 200 million for its operation initially,” said the MoF official.

On Gorakhkali Rubber Industry which is not functioning well due to its inability to acquire raw materials on time, the MoI has suggested running the factory at full capacity. “The MoI has sought Rs 100 million for its smooth operation initially,” said the MoF official.

With regard to Biratnagar Jute Mill, the ministry has not suggested any modality but has insisted on running it for its historical importance in whatever form possible. The government had paid off its staff long ago and closed down the factory.

Posted on: 2011-12-10 09:39

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