Despite losses, public firms dole out millions in perks


Aug 21, 2018-

Public enterprises spend millions of rupees every year on facilities for board and staff members even as a majority of them are incurring losses.

A study carried out by the Commission for Investigation of Abuse of Authority (CIAA) shows that public enterprises are forking out huge sums of money in the name of amenities that range from free electricity, free telephone and internet, and free tickets to events for their officials. Of the 11 public enterprises investigated by the anti-graft body, six institutions were found liberally spending on benefits for their board members and staff.

The study released on Monday shows that even the enterprises that are incurring heavy losses are continuing to extend such facilities in kind. The Nepal Water Supply Corporation has been providing Rs560 to each staff member as drinking water allowance. This cost the institution Rs18.99 million in the last five years. The corporation reported losses of Rs207.9 million in the fiscal year 2016-17 while its cumulative losses amount to at Rs1.2 billion, according to the Annual Performance Review of Public Enterprises-2018.

Another loss-making entity—Dairy Development Board (DDC)—provides a litre of milk every day and 1 kg ghee or butter each month for its staffers free of cost. This giveaway has cost the DDC Rs118.19 million in the last five years.

Two other major public enterprises, Nepal Electricity Authority (NEA) and the Nepal Airlines Corporation (NAC), were also found to be distributing services worth millions of rupees among their officials free of cost. Although both the corporations registered profits in 2016-17, they have cumulative losses.

The NEA provides up to 125 units of electricity for its employees free of cost. The NAC, on the other hand, issues four round-trip tickets to its board members and officials and two to its formers board members and staff. Sugat Ratna Kansakar, the NAC managing director, defended the dole as continuation of the practice.

Nepal Telecom, one of the few profitable public enterprises over the years, spent Rs562.86 million in the last five years for free telephone and internet services made available to its employees.

According to the CIAA, a number of corporations—Nepal Oil Corporation, Udaypur Cement, Timber Corporation of Nepal, Nepal Food Corporation, and the National Trading—were not seen doling out freebies to their staff.

Rameshwor Dangal, spokesperson for the anti-graft body, said the CIAA studied only the perks doled out by the public enterprises—not monetary incentives provided by a number of institutions. “The complaints filed against some of these public corporations led to the investigation,” said Dangal.

The watchdog said there was no uniformity in the facilities. Some of them have incorporated the amenities in their regulations while others adopted the system following a decision by the board of directors.

“Since these facilities have not been counted as earning by the board members and employees of the public enterprises, the government has not been able to tax such income,” the CIAA said in a statement.

The anti-graft body is said to have written to the Prime Minister’s Office and the Finance Ministry, recommending that all public enterprises should only make such arrangements considering their financial health, capacity, business transactions, and long-term viability. The CIAA has instructed the government to enforce a regulation for providing the amenities through a separate fund, making them taxable.Of the 40 public enterprises in total, 19 have cumulative losses.

Published: 21-08-2018 07:24

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