8.41 The private sector plays a leading role in production and employment.
According to the International Labour Organization (ILO), it is estimated
that 90.0% of total employment in developing countries is generated by
the private sector. According to the National Economic Census conducted
by the National Statistics Office in 2018, 80.0% of Nepal's total
employment is in the private sector.
8.45 Until mid-March of 2023, there have been registrations for approximately
310,000 companies of various types. Among them, the majority, 96.8%,
are private limited companies. Additionally, out of total public limited
companies, 2% are joint investments from the government and private
sectors, while approximately 97% of the companies operate with full
private sector investments. Companies fully owned by the government
constitute only 1.2%.
9.21 Electricity, a total of 2,449 MW from hydropower, 75.04 MW from solar
plant, 53.4 MW from thermal plant, 82 MW from alternative energy
promotion center and 6 MW from sugar mill through co-generation
technology is produced. Similarly, 661 MW electricity owned by Nepal
Electricity Authority, 478 MW from subsidiary companies of Electricity
Authority and 1,527 MW from private sector power project, has been
connected to the national grid from power projects.
12. Public Enterprise Management - Amongst the 69 public enterprises (PEs)
operated previously, 30 PEs have been privatized and 44 PEs are in existence at
present along with the PEs established in later years, out of which 42 PEs are in
operation.
8. Public Enterprises Management - The following improvements are to be done
with regards to the financial management of public enterprises:
8.1. An umbrella policy should be formulated and implemented for operating the public
enterprises (PEs) effective and commercial manner. In addition, integrated law and
strategic plan and business work plan should also be formulated and implemented
in line with the policy.
8.2. By analyzing relevancy of existing PEs, clear preferences need to be determined
about the PEs which need - to be continued with the government's involvement, to
be operated under public-private partnership, to be run under management contract,
to be operated from private sector, and to be merged with one another or liquidated.
Except the PEs providing basic services, certain percent of government shares
existed in remaining PEs are to be privatized gradually, and the management
efficiencies of PEs are to be enhanced encouraging the participation of strategic
partners.
8.3. There should be arrangements for giving the responsibility of board of directors to
the specialist having professional capabilities, appointing chief executives making
competition on the basis of business work plan, and making work performance
contract with chief executive and taking decision about the continuity of a chief
executive on the basis of its annual work performance.
8.4. The accounts of share and loan investments of the governments in PEs and receipt
of interests and dividends thereon should be updated by reconciling regularly. The
principal and interest to be paid to the Government of Nepal by PEs should be timely
settled preparing necessary financial plans. The outstanding rent and lease rents due
from the privatized PEs since long period should be recovered along with applicable
fees, interest and fines as per laws making timely follow-up.
8.5. Nepal Financial Reporting Standards need to be fully implemented to maintain
fiscal discipline in PEs. By making the internal controls system effective, the final
audits should be completed timely basis, and arrangements should be made for
implementing the audit observations/ recommendations.
8.6. By making proper safeguards and utilization of the assets - lands, buildings etc.
owned by the PEs, the records of assets should be properly maintained and reports
of same should also be regularly prepared.
8.7. Appropriate control measures should be adopted to keep the operating expenditure
of the PEs within reasonable limits. In view of change occurred in business work
plan, work scope and technology, the employee's position of PEs should be
reviewed conducting Organization and Management Survey. The performance
evaluation of employees are to be conducted on the basis of job description and
work performance indicators of the employees, the such performances are to be
linked with their career development.
8.8. The unsettled disputes of the privatized PEs need to be shorted out. Regular
Monitoring are to be conducted pursuant to the implementation of provisions
specified in agreements of the privatized PEs. The assets of the liquidated or nonoperational PEs, the like - machinery tools, lands, buildings, and equipment etc.
should be utilized by obtaining the records of such assets.
Cases:
Electricity Trade: there is no provision in the Electricity Act 2049 B.S. to allow the private sector to trade in electricity and the new Electricity Act has not yet been enacted, the demand of energy producers has not been met so far.
Nepal Electricity Authority (NEA) is the sole buyer of electricity generated by private companies. But now due to the uncertainty of the market, the NEA has frequently stopped the Power Purchase Agreement (PPA) with the private sector for run-of river projects.
“If power trade is opened for the private sector, any privately-owned power trading company can also enter PPA with such developers by searching new destinations in the electricity market on their own,” said Karki.
The private sector has been playing an important role in the development of hydropower in Nepal since the introduction of the Electricity Act 1992 (2049 B.S.). The installed capacity of hydropower projects has now reached about 3,000 MW from the very first-ever generation of 500 KW from Chandrajyoti Hydro-electric in Pharping, the first hydropower of Nepal.
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