A continuous rise in the cumulative loss of Nepal Oil Corporation (NOC) and Nepal Electricity Authority (NEA) pushed up the overall loss of the PEs, according to the Annual Performance Review of the Public Enterprises 2015. These two PEs’ cumulative losses stood at Rs32.84 billion and Rs17.94 billion, respectively. Seven PEs faced losses of more than Rs1 billion. They are Rastriya Banijya Bank, Nepal Orient Magnesite, Udayapur Cement, Nepal Airlines Corporation and Nepal Food Corporation, besides NOC and NEA.

“A few other industrial and commercial enterprises have also been facing losses, the impact of which will be seen on the government’s investment and the state treasury,” read the review.

It has recommended the government conduct legal and structural reform in PEs that have been facing problems.

According to the review, four PEs had cumulative profit of more than Rs1 billion last year. They are Nepal Telecom, Civil Aviation Authority Nepal, Agriculture Development Bank and NIDC Development Bank. Nepal Telecom earned a cumulative profit of Rs42.48 billion, the biggest of all.

Of the 37 PEs, 18 made net profits, while 15 faced net losses. The data of four—Nepal Engineering Consultancy Service Centre, National Construction Company, Janakpur Cigarette Factory and Rastriya Aawas Company—were yet to come.

The poor performance of NOC and NEA also led to a decrease in the overall net profit of the PEs by Rs6.35 billion to Rs5.05 billion at the end of the last fiscal year.

The statistics show the government’s investment (both share and loan) has been increasing. The share investment in the last fiscal increased 7.57 percent to Rs115 billion, while loans rose 4.86 percent to Rs111 billion.

Despite the growing investment, the rate of returns has been declining. The government received Rs6.61 billion in dividend last year—5.71 percent of the share investment. In the previous year, it had received dividend of Rs6.99 billion—6.49 percent of its investment.

During the review period, Nepal Telecom, Agriculture Development Bank, Hydropower Investment and Development Company, Industrial Estate Management Limited and Citizen Investment Trust paid dividend to the government.

Bimal Wagle, chief of Public Enterprise Board, sought structural reforms in PEs, besides political commitment and the bureaucratic reforms. “The PEs should be reformed as per the changed context,” he said, adding the government should identify the context in which the PEs were established. “Identifying the change in objectives, the government should not hesitate to dissolve or merge the PEs to reduce liabilities.”

With a total operating income of Rs258 billion, the share of PEs in the country’s gross domestic product stood at 13.29 percent. The largest share—7.51 percent—was from PEs related to the commercial sector, while those from the social sector contributed the least 0.06 percent.