What Is the Status of the 16 Loss-Making Public Institutions?

According to a review by the Ministry of Finance, out of the 45 government-owned public institutions, 16 are operating at a loss, with returns on government investments amounting to only 2.3 percent. Nepal Airlines Corporation has incurred the highest losses among these institutions, with total accumulated losses exceeding NPR 1.89 billion. The government has unveiled a strategy to either liquidate or reform the non-performing and unhealthy public institutions. 14 Jestha, Kathmandu.

The financial and managerial conditions of public institutions wholly or mostly owned by the government have become a cause for serious concern. The ‘Annual Review of Public Institutions’ released by the Ministry of Finance on Wednesday reveals that the returns from investments worth billions in these institutions are limited to just 2.3 percent. This return rate is significantly lower than the interest rates offered by commercial banks on fixed deposits, raising questions about the appropriateness of state resource allocation.

The report attributes poor performance primarily to managerial weaknesses and political interference. Of the 45 existing public institutions, only 27 are generating profits, while 16 are operating at a loss. It states, “Compared to similar private sector businesses, the efficiency of public institutions remains considerably weak.”

Highlighting the challenges faced by these institutions, the report emphasizes the severe lack of financial discipline. Many institutions are reportedly using loans taken for capital projects to cover operational expenses or pay salaries. The report identifies political appointments at senior levels as a significant problem, stating, “Appointments to senior positions such as chairpersons, board members, and executive chiefs are heavily influenced by politics. Separating these appointments from political influence and selecting suitable candidates based on merit has become a major challenge.”