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Kathmandu Thursday August 09, 2001 Shrawan 25, 2058.
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Privatization in doldrums
The much-hyped and long overdue privatization
process has received another setback with the privatization of the Butwal Power Company
(BPC) mired in controversy. Bogged down in bureaucratic bungling and legal wrangling, the
BPC privatization is in the doldrums. Efforts to privatize BPC have fallen flat after the
Finance Ministry scrapped a technical bid by the Independent Power Company (IPC), a joint
power venture. The bid was cancelled since it failed to fulfil bureaucratic niceties or so
the officials concerned say. With the IPC off the scene, the Norwegian Interkraft is now
the sole bidder for 75 percent of the shares of 30-megawatt BPC. Rules are that the
Finance Ministry cannot decide on privatization on its own without approval from the
Ministry of Water resources, and this means further delay and more hassles. Coordination
among the various ministries seems to be a daunting task, as each tends to work in its own
style. And what happened with BPC is just a poignant instance of the prevalent
bureaucratic culture. Since the last three years, BPC has been talk of the privatization
circles, but for much of the time it has been overshadowed by controversy. Such a
development only dampens the government’s economic liberalization policy. But the
point is that privatization cannot be called policy in true essence because the government
has embarked on it without any convincing rhyme or reason.
Privatization was the buzz-word in the
post-jana andolan era. Though the Ninth Plan has put 39 public enterprises on the list for
privatization, only 16 have changed hands so far, with the other sick public enterprises
still draining the national coffers. This has not only sent a negative signal to the
international donor community, but is also a major setback for the government’s
commitment to economic reform. The Department for International Development even
threatened to withdraw its financial support owing to a very slow privatization process in
Nepal. Even after making a string of mistakes, the government is yet to learn. Take the
case of Hetauda Textiles Industry. This loss-making public enterprise has set a kind of
good precedence in the privatization venture. Before going in for privatization, the
government pruned the overstaffing. But not all are following in its footsteps. With their
overwhelming number of employees, the sick public enterprises are readying themselves for
privatization. And this is exactly where the problem lies. No rational private
entrepreneur wants to take on such ailing industries along with their bloated staff.
In a donor-driven economy like ours, gains and
losses are tallied by how well we carry out the wishes of international donor agencies. At
a time when they are putting so much emphasis on privatization, the snail-like progress
comes as a major constraint. So much so, even the management contract hand over for the
Rashtriya Banijya Bank and Nepal Bank Limited is tied up with donor promises. Likewise, to
qualify for World Bank loans, the government has to privatize seven state-run enterprise
riddled in corruption, mismanagement, overstaffing and poor technology. But due to the
government’s lackadaisical approach, privatization has been little more than a
frivolous slogan. Surely, with the donors treating privatization as a make or break
proposition, the government cannot afford to ignore it.
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