Public Enterprises (PEs) reported net profits worth Rs34.96 billion in 2015-16, a marginal increment of 1.61 percent compared to the previous fiscal year as numerous government run enterprises improved their financial position in the last

fiscal year.

Of the total 35 PEs in operation, 23 made profits while 12 faced losses last fiscal year, according to the Annual Performance Review Report of PEs released by the Finance Ministry, on Sunday.

The overall profits of government run enterprises increased due to a surge in profits of Nepal Oil Corporation (NOC), Nepal Telecom (NT), Nepal Bank Limited (NBL), Agriculture Development Bank (ADBL), Rastriya Banijya Bank (RBB) and Civil Aviation Authority of Nepal (Caan). “The overall net profits of PEs have been improving,” the report has stated.

NOC topped the list of profitable PEs by earning Rs19.35 billion. The corporation’s net profit had surged 28.65 percent last year. A global drop in fuel prices helped the corporation improve its financial position in the last two years.

NT was the second most profitable PE with Rs13.27 billion earned. It managed to reach second place on the list even though its profit fell by 8.79 percent.

NBL saw its profit jump nearly sixfold to Rs2.88 billion.

ADBL earned profits of Rs2.53 billion, down 41 percent over the period. Similarly, RBB’s profits also declined to Rs2.35 billion from 4.64 billion. Net profit of Caan surged 19 percent to Rs1.41 billion.

Herbal Production and Processing Company, Hetauda Cement Factory and Rastriya Beema Sansthan were three PEs that showed financial improvement by making a profit in the fiscal year 2015-16. The three PEs had not been making profit the year before in 2014-15.

Bimal Wagle, former chief of the Public Enterprise Board (PEB), however, said the government should look into what has contributed to the profit rise in the PEs.

“Whether the PEs have been earning the profit through their own efficiency

due to the external factors, that should be evaluated,” said Wagle, “The fluctuation in market prices could have played a factor in PEs making profit instead of their strong performances.”

Of 12 PEs that faced losses in 2015-16, Nepal Electricity Authority (NEA) observed the highest loss of Rs8.90 billion.

NEA had also reported a loss of Rs4.96 billion in the previous fiscal year. Other poor performers include, Udayapur Cement, Nepal Orind Magnesite, National Trading Limited and Nepal Food Corporation, continuing their losses from the 2014-15 fiscal year.

Nepal Food Corporation had previously recorded a profit of Rs43.1 million in 2014-15, but reported a loss of Rs27.2 million in the fiscal year 2015-16.

Wagle said many of the loss making enterprises have been unable to conduct their core functions effectively. “In addition, they have failed to mobilise the fixed assets in order to maximise earnings out of the assets.” With an increase in PEs’ profits, the government’s dividend amount from the PEs increased to Rs7.81 billion from Rs6.45 billion.

In the last fiscal year, four PEs including NT, Industrial District Management Limited, Nepal Stock Exchange and ADBL paid dividends to the government.

Compared to an increase in government investment by Rs36.24 percent in the PEs, the dividend amount increased only 11.33 percent, according to the report.

Wagle opined that the government should keep up with the privatisation process of the poor performing PEs soon.

“The government should engage in those areas where private sectors are inefficient and not willing to work,” said Wagle adding that the PEs should help improve the backward and forward linkage rather than just focusing on earning profits.