Public Enterprises (PEs) recorded a net profit of Rs33.92 billion in 2014-15, up Rs5.05 billion compared to the previous fiscal year.

The surge in the overall profit of the PEs was driven Nepal Oil Corporation (NOC), Rastriya Banijya Bank (RBB), Nepal Telecom (NT) and Agriculture Development Bank Limted (ADBL). Of the total 37 PEs, 20 made profits while 14 faced losses last fiscal year, according to the Annual Performance Review Report of PEs released by the Finance Ministry on Thursday.

NOC contributed the most. The state-run oil monopoly earned a net profit of Rs15 billion last fiscal year especially due to the fall in the crude oil prices in the international market. With surging profits, NOC was able to repay its loans worth Rs32.64 billion to the government and other financial institutions last year. In 2013-14, NOC had posted a loss of Rs8.3 billion.

Bimal Wagle, former chief of the Public Enterprise Board (PEB), however, said the government should look into what has contributed the profit rise in the PEs—their own performance or external factors. “Profit alone does not tell the whole story. More efforts are needed for the overall restructuring of the PEs.”

Among the star performers for the past several years, NT last year recorded a net profit of Rs14.55 billion, against Rs11.55 billion profit in the previous year.

Gradually improving their financial health over the last few years, state-run two commercial banks—RBB and ADBL—saw their profits rise to Rs4.64 billion and Rs4.32 billion, respectively.

Wagle stressed on the need for categorising the PEs based on their objectives. “The government should classify the PEs into three categories—those needing government subsidy, those having potential to break-even and profit-oriented ones,” said Wagle.

Although the PEs recorded good profits, the government’s dividend from them dropped to Rs6.45 billion from Rs6.61 billion. In the last fiscal year, only three PEs—NT, Industrial District Management Limited and Rastriya Aawas Company—paid dividends to the government.

In the period under review, unfunded liabilities of the PEs fell 4.49 percent to Rs25.8 billion.

Despite the improvement in profits, the report has stressed on the need for managerial reforms at the PEs. The report has pointed out lack of clarity in legal framework, use of traditional technologies, poor governance, red tape, absence of effective monitoring and evaluation system and trade unions as major challenges facing the PEs.