Nepal | August 05, 2020

EDITORIAL: Privatise NAC

The Himalayan Times
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The govt should give up the idea of doing business in airlines as the private sector has become capable of competing with others

A taskforce led by former secretary Sushil Ghimire submitted its report to Minister for Culture, Tourism and Civil Aviation Yogesh Bhattarai on Wednesday, suggesting privatisation of the ailing Nepal Airlines Corporation (NAC) by divesting 49 per cent of its shares to Nepalis, foreign investors and the public to make it more competitive, and launch aggressive marketing in the aviation sector. It has recommended for privatisation seeking a strategic partner as the old organisational structure in operation under the Nepal Airlines Act, 1962 is unsuitable in this age of competition. The report has suggested renaming NAC as Nepal Airlines Company Limited, where the government would keep 51 per cent of the shares, while allocating 35 per cent shares for foreign or Nepali investors, 1.5 per cent for NAC staffers, 1.5 per cent shares for civil servants, 6 per cent for tourism entrepreneurs and 5 per cent share for the public. Apart from suggestions to focus on human resource development within NAC, the report has also advised the ministry to raise its paid up capital to Rs 200 billion and issued capital to Rs 150 billion to make the airline competitive in the world market. Currently, NAC has been suffering a loss of Rs 5.21 billion, while it is saddled with a debt burden of Rs 40 billion.

This is not the first time that a taskforce has come up with a number of recommendations to improve the organisational capacity and financial health of the airline. Six high-level taskforces have been formed in the past 22 years. But none of the reports was put into practice due to opposition from within the corporation and the ministry’s unwillingness to implement them. Besides the previous six reports, even the International Civil Aviation Organisation (ICAO) had also advised the ministry to operate domestic and international flights under two separate entities some 15 years ago. But the ministry never paid any heed to its suggestion.

It may be recalled that the government had asked the tourism ministry, through the budget speech of fiscal year 2073/74, to work out a modality to bring in a strategic partnership for NAC. In response to it, Germany’s Lufthansa Consulting had submitted a proposal to this effect. Despite the Finance Ministry’s approval to go ahead with it the same year, the process did not move ahead due to the ministry’s reluctance. As other taskforce reports have been shelved, there is no guarantee that this report will also not gather dust though the tourism minister has vowed to implement it. Our airline was established at about the same time as Thai Airways, and it inducted its first jet – the Yeti – even before Malaysian Airlines. However, NAC’s wings were clipped due to political interference and poor management. Past experience has taught us that we have no option other than to fully privatise it. There is no guarantee that NAC will revive its old glory by divesting 49 per cent of its shares to Nepalis and foreigners as the government will still have majority share. In this day and age the government should act as a regulatory body, instead of doing business in areas where the private sector can perform better. To begin with, the report can be a take-off point for substantive debates on  the future of the so-called national flag carrier.


Police action

In a welcome move, Nepal Police has taken action against more than 2,000 erring cops in a bid to put an end to the irregularities and anomalies in the organisation. This is a huge number by any means, and they include constables to senior superintendents of police. Of them, 256 have lost their jobs, with seven of them not eligible for any government post in the future. The police force in Nepal has a lot of image building to do as police personnel are seen to be widely corrupt and negligent in their duties, especially outside the capital. Crimes such as smuggling would not have been so rampant without the connivance of the police.

The police force, like any other wing of the government, has fallen in despair over the decades largely due to the interference of the parties in power, in particular the home minister. So unless the recruitment, appointment, promotion and transfer of police personnel are made transparent and not based on monetary gifts, bringing reforms in the police force will be very difficult. The current action against erring police personnel, however, must be hailed as it shows that the Nepal Police is not indifferent to the irregularities taking place there.

 


A version of this article appears in print on September 20, 2019 of The Himalayan Times.


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