After engaging in civil service for over three decades, BIMAL PRASAD WAGLE has served as a secretary to different ministries, including the Ministry of Finance. Owing to his long experience and record of having been a chairman of 14 public enterprises (PEs), Wagle has been appointed the chairman of newly formed Public Enterprises Directorate Board (PEDB), a body that recommends government on reform measures of PEs.
He spoke with THT Perspectives about the opportunities and challenges facing the PEs in the country.
Why do PEs in Nepal draw attention as dysfunctional institutions?
The fact is, the overall performance of PEs is unsatisfactory, which is reflected in their financial situation. Most of them are operating in loss and unable to meet the objectives they were established to fulfil. For instance, one of their objectives is to generate employment and PEs now provide jobs to around 34,000 people. But if you consider the huge capital invested, it is hard to say that they are generating employment. Their second prime objective is to substitute imports. But overall performance of PEs stands largely dismal, thanks to their low efficiency. The other fact is that the PEs were established in a protected regime but the scenario now has undergone a drastic change. Against this backdrop,
it is also natural that they are unable to perform effectively.
What could be the practical solution measures to boost the financial health and performance of PEs?
The overall reform of PEs’ economic health is a must. A huge investment on PEs going down the drain is not acceptable. But they are riddled with multitudes of problems. So, we need to boost their efficiency for them to be able to churn out quality products at reason-
able price. If not, they can’t survive. However, restoring their financial health takes time. First, we need to identify factors rendering PEs inefficient and correct them. They may have problems at operational and policy level, which must be addressed.
As part of the reform, perhaps the government needs to rethink about structural changes at policy level. Say, if PEs are running businesses that private sector is more efficient at, it is worth rethinking. Also, when it comes to running an institution, we must first be clear whether the institution is relevant to the current time. Once we determine this, we can mull over its model of operation — whether as a PE, private enterprise or should it be operated in the public-private partnership. Not to forget, our primary interest is to run an institution in an efficient manner so that public can reap the benefits.
Do you think Nepal’s private sector is strong and mature enough to take over PEs? Should the government still run PEs dealing with business and trading?
I hesitate to say that private sector of Nepal is strong enough, since ours is a small economy with small number of players. But private
sector of Nepal is definitely more efficient than the government in terms of doing business. That is because they exercise a greater degree of responsibility, accountability and freedom.
Ours is a liberalised economy and privatisation is its critical comp-onent. In areas where private sector is more efficient, perhaps it is wiser to encourage them to take the lead.
What will PEDB’s role be in overhauling weak PEs?
The board is established with the prime objective of reforming PEs overall and incorporates many factors. In a broader sense, the board’s role can be divided into two — it shall address the generic as well as specific problems of PEs. We start with identifying all sorts of problems dogging PEs. Currently, we are working to assess the factual status of PEs. In practical terms, we are starting with the selection of CEOs and board members for PEs. Selection of a right leader for a PE is of paramount import-ance. The right leadership has a great hand in steering an institution to the right direction. Therefore, our reform starts with the selection of CEOs because first it is a leadership issue and also because some PEs are sans CEOs.
How hopeful are you about the future of PEs?
In terms of PEs with business orientation, it is difficult to predict because business always entails risks. But we shall ensure that improvements are made wher-ever there is room for
it. PEs shall not move ahead in the way they used to. Things must improve once the recommendations by the board are implemented.
But PEs comprise of two words with different connotations — public referring to the government means more social responsibility while enterprises means business and a higher business orientation tends to undermine social responsibility. Establishing the judicial balance is the challenge. Government is committed towards reforming PEs. Otherwise, PEDB would not have been born.