In FY 2021/22, the net profit of 25 PEs increased by 33.65 percent while the net loss of 17 PEs rose by a staggering 610.96 percent.
Among the PEs, Nepal Electricity Authority (NEA) earned Rs 13.37bn in profit in FY 2021/22 overtaking Nepal Telecom as the biggest profit earner; Nepal Telecom posted Rs 8.47bn profit in the last fiscal year. Meanwhile, Rastriya Banijya Bank, Citizen Investment Trust, and Deposit and Credit Guarantee Fund earned net profits of Rs 4.29bn, Rs 3.10bn, and Rs 3.01bn respectively. With PEs continuing to bleed taxpayers’ money, with no returns on the money invested from the state coffer, the government has put forward a plan to run PEs that are weak in terms of capital, and technology by the private sector. Finance Minister Prakash Saran Mahat made such a statement while unveiling the Economic Survey for FY 2022/23 on Sunday. “It is necessary to identify PEs that are not operating effectively and that do not need to be kept in the public sector. Such enterprises should be operated by the private sector with more capital technology and competent management,” said Mahat. The government in the third week of April this year, has also formed a task force to reform PEs under the leadership of former finance secretary Shankar Adhikari. The PEs in Nepal saw a drop in their profits post-Covid-19 pandemic, according to a recent report from the International Monetary Fund (IMF). While the total profits of PEs were largely unchanged in the initial stage of the pandemic (the last four months of FY 2019/20), the profits reduced by 0.5 percent of GDP in FY 2020/21, as almost half of PEs ran in losses that year. Except for the PEs in the financial services sector, institutions in trading, public utility, and services sectors saw a big drop in profits or an increase in losses in FY 2020/21. Compared with the pre-pandemic FY 2018/19, PEs’ contribution to fiscal revenue (income tax and dividends) declined by 0.16 percentage points of GDP in FY 2020/21 and 0.23 percentage points in FY 2021/22.
