Profits of state-owned cos swell 18.5pc to Rs42.67bPublic enterprises (PEs) earned net profits totalling Rs42.67 billion in 2016-17, a growth of 18.5 percent compared to the previous fiscal year which has been attributed to an increase in the number of state-owned companies along with an improvement in their financial position.
Public enterprises (PEs) earned net profits totalling Rs42.67 billion in 2016-17, a growth of 18.5 percent compared to the previous fiscal year which has been attributed to an increase in the number of state-owned companies along with an improvement in their financial position.
Among the 37 PEs in the country, 26 made profits while the remaining 11 went into the red during the review period, according to the Annual Performance Review Report of PEs released by the Finance Ministry on Sunday. In the previous fiscal year, only 23 PEs posted profits.
Telecommunications giant Nepal Telecom made the largest net profit of Rs15.37 billion, a jump of 15.84 percent. The company’s profits swelled following a sharp rise in the number of subscribers.
The government owns 91.4 percent of the company’s shares. Nepal Bank Limited posted a 8.15 percent rise in profits to Rs3.11 billion. Similarly, Rastriya Banijya Bank earned a profit of Rs2.77 billion, up 17.88 percent over the previous year while Agricultural Development Bank’s profit inched up 1.34 percent to Rs2.56 billion.
Among the loss makers, oil monopoly Nepal Oil Corporation’s profit plunged 46.22 percent to Rs10.41 billion which has been blamed on soaring global petroleum prices. Janak Education Materials Centre’s losses increased almost threefold to Rs316.2 million, and Dairy Development Corporation’s losses almost doubled to Rs213.9 million.
Likewise, Nepal Water Supply Corporation suffered a loss of Rs207.9 million, a threefold increase over the previous year. Nepal Drugs Limited was able to cut its losses by 10.53 percent to Rs138.7 million. Similarly, Nepal Orind Magnesite reduced its losses by 23.40 percent to Rs119.50 million.
The revenues earned by the PEs accounted for 12.2 percent of the country’s GDP. They contributed Rs58.74 billion into the government coffers, or 9.7 percent of the total revenue collection. The paid-up capital of the PEs grew 27.29 percent to Rs182.77 billion during the review period.
Despite the rise in profits over the previous fiscal year, the Finance Ministry’s report showed that their return on investment was only 0.4 percent.
Likewise, the administrative costs in these PEs also rose by 30.21 percent to Rs30.30 billion. The liabilities of these government run enterprises, which were not managed in their reserve fund, increased by 18 percent. Such unfunded liabilities are not backed by the reserve fund and are to be borne by the government. “It means that PEs still suffer from poor working ability,” reads the report.
In addition, a large number of PEs failed to carry out their audit on time, which has raised questions on the financial discipline of these enterprises. According to the report, only 10 enterprises have been doing their financial audit on a regular basis.
As of 2016-17, only 18 have completed their annual audit. Nepal Orind Magnesite, Nepal Food Corporation, National Productivity and Economic Development Centre, Rastriya Beema Sansthan and Rastriya Beema Company are yet to finish assessment of their financial transaction of more than five years.