Fixing Governance First to Rescue Ailing PEs

The government has invested a staggering Rs 930.88 billion in public enterprises (PEs) by the end of 2024/25, yet the returns remain negligible. This highlights the dismal state of the country’s PEs, many of which are struggling to stay afloat and have incurred heavy losses for the state. The total investment comprises equity and loans provided to 159 government-owned enterprises. Of these, 116 enterprises have received Rs 404.81 billion in equity. The Nepal Electricity Authority, Civil Aviation Authority of Nepal, Nepal Telecom, Rastriya Banijya Bank and Agricultural Development Bank are among the largest recipients. Government loans to PEs stand at Rs 526.06 billion — Rs 158.18 billion from domestic sources and Rs 367.88 billion from external sources. The NEA, Kathmandu Valley Water Supply Management Board, CAAN and Nepal Water Supply Corporation hold the highest loan liabilities. What is concerning is that despite such extensive funding, returns are far below expectations. Last year, the government recovered only Rs 2.62 billion in principal and Rs 5.29 billion in interest, even though it had invested Rs 41.48 billion. Currently, PEs owe the government Rs 400.08 billion, consisting of Rs 259.19 billion in principal and Rs 140.88 billion in interest — a sign that the gap between investment and earnings continues to widen.