Margaret Thatcher’s bold initiation of privatisation of public sector service delivery entities in UK in the late 70s gave a new impetus to transfer of service delivery from public enterprises PEs) to private entrepreneurship. Ibin khaldun, a prominent Arab philosopher of the 14th century, once said: “Commercial activity on the part of government itself is harmful to the subjects and ruinous to tax revenue.”

The restoration of democracy in 1990 created an environment for open economy in Nepal. Soon after, under the enactment of Privatisation Act, the government enforced the process of privatisation of financially weak public enterprises. Most PEs had been established in the early 60s and 70s with the state expected to deliver the goods and services.

Twenty-six PEs have been privatised so far. Most of the privatised PEs had been incurring losses in billions of rupees. The government invested Rs. 59, 675 billion as share investment in 38 PEs, and Rs. 64, 552 million as loan investment till 2004/2005. But the rate of return was a negligible 5.62 per cent of dividend. This amount could well have been utilised to alleviate poverty. Government’s service delivery is dismal as compared to its immense financial burden in running the PEs.

The impact assessment of the privatised PEs has not been carried out by the concerned ministries till date. Pre and post-privatisation state of the PEs should be made public so that the impact of privatisation can be measured. This will help planners and stakeholders to make an evaluation of the areas of revenue generation.

The efficiency and service delivery of most PEs under full or partial ownership of government is deplorable. They have been unsuccessful at gaining people’s trust and sympathy. We all saw how people were unnecessarily troubled during Nepal Telecom’s SIM card distribution. The case of Janakpur Cigarette Factory is a good example. It has 1,800 employees but occupies a meagre 25 per cent of national cigarette market, while the Surya Tobacco with 500 employees covers over 75 per cent of national market.

The state should only be concerned with formulating appropriate policies and programmes and not burdening itself with loss-making PEs. It should instead explore the new horizon of public-private partnership and its role as a watchdog. The government should

focus on evaluating the past performance of privatised PEs. The Privatisation Act, 2050, needs to be revised and by-laws to this act formulated. Similarly, the evaluation of assets of respected PEs needs to be done by the independent state entities so that they are not undervalued and sold cheap.

Another important step is strengthening of the MoF’s Privatisation Cell with appointment of economic experts and logistics support. As in Malaysia, the privatisation division could be established as a division of the PM’s office. There needs to be greater commitment at the political level for the privatisation of the PEs. But first the government should spell out its vision of privatising PEs.