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Kathmandu,Tuesday March 21, 2000 Chaitra 08, 2056.
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More transparency on
privatization stressed
By a Post Reporter
KATHMANDU, March 20 - An independent review of the
privatization programme in Nepal funded by British development agency Department for
International Development (DFID) has pointed out a number of weaknesses, in the process,
ironically the report itself is not free from flaws.
The report has pointed out anomalies in the
political commitment, process and procedures and transparency of privatization process.
Citing the commentators, the report says, “The
following concerns were expressed: past privatization transactions have been unsuccessful;
there is no transparency or accountability of process; there is influence of vested
interests; allegations of corruption and financial irregularities; no accountability in
the utilization of proceeds and the interests of workers have not been protected.”
Privatization experience in Nepal and
internationally suggests that the “no redundancy” policy for employees
contributes to the failure of privatized enterprises. “From the review team’s
discussions with stakeholders, employees may be prepared to take early retirement given
adequate compensation.”
The report has also raised question regarding the
validity of present use of proceeds from privatization. “As a general rule, the net
proceeds from privatization (after financing the costs arising from the transaction and
any liabilities) should not be utilized in the regular budget as these proceeds are
generated from one-off transactions.”
Privatization proceeds should be used firstly on
the activities which strengthen privatization, and then for infrastructure or
contributions to economic or social development.
The report has slapped government a serious
allegation on the area of transparency. “Although the Privatization Act provides the
minimum requirements for transparency, it is clear from the interviews that the government
has not been successful in the dissemination of information about the programme.”
The report says criticisms ranged from withheld of
information to strong accusation based on corrupt behaviour and financial irregularities.
The report has also dismissed the claim of a
similar report prepared by the Privatization Cell, Ministry of Finance some months back.
In its report, “ Monitoring Privatized Enterprises,” the Cell had said,
“privatized enterprises are performing better than they did under government.”
The report has claimed out of ten major privatized
enterprises, “nine have increased investment, six have increased production, seven
have increased sales and five have increased profits.”
Present report says, “…the individual
analyses of those enterprises demonstrate that almost every enterprise is experiencing
financial difficulty.” The report has, however, failed to deliberate which of the
former public enterprises, industries mentioned in the Ministry’s report are reeling
under financial difficulty.
The report is flawed especially in its
understanding of the role of the Privatization Committee. “…the Committee
rarely meets and therefore the Cell directly submits decision to the Minister of Finance
for presentation to the Cabinet. The line ministries have also stated that they are not
involved in the process from the outset and often have to implement decisions enforced
from the Ministry of Finance”.
Privatization Act 1994 has made it mandatory that
any transactions regarding privatization of public enterprises should go through the
Privatization Committee and this provision has not been violated by any government in the
past. Similarly, the presence of the secretary of the concerned ministry has been made
compulsory for any decision regarding privatization. Thus the report’s allegation
that the line ministry is neglected in the privatization process seems overexerted.
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