The PE Management Board, headed by Bimal Wagle, had earlier called on the government to ensure participation of the private sector if it wants to lift the state-owned pharmaceutical company from its deathbed.[break]
The Board had offered options like selling the assets to the private sector, incorporating a strategic partner from the private sector or public private partnership model to the government to enhance efficiency and performance of the loss making company, which has remained closed for around three years.
But a meeting held recently by finance minister Barsha Man Pun, industry minister Anil Kumar Jha, and secretaries and other top officials of finance and industry ministries decided to go against the recommendation made by the Board.
"We decided not to heed the suggestions laid by the Board as the company is involved in production of life saving drugs and has kept its goodwill intact despite weak financial performance," Khum Raj Punjali, joint secretary of the Ministry of Finance, told Republica.
The government has now asked the management of Nepal Drugs Limited to submit a business plan entailing details like investment required to run the company, sources from where the capital can be mobilized, projection on attainment of the breakeven point, types of drugs the company is planning to manufacture and types of packages that can be launched to retrench the existing workforce.
Nepal Drugs, a troubled state-owned enterprise, shut down its operations almost three years ago after the Department of Drugs Administration refused to renew its operating license citing the company´s production standard did not meet the minimum manufacturing standard set by the drugs regulator.
At that time, the department had asked the company, which was facing severe financial crisis, to immediately revamp its production unit so as to meet the Good Manufacturing Practice (GMP) standard.
So far, the company has failed to comply with the regulator´s instruction as it is not in a position to mobilize financial resources required to implement reform measures. This, in the meantime, has increased the financial burden on the government, as it is forced to fork out Rs 4.2 million every month to cover salary expenses of 279 staff at the company.
Surprisingly, the government is wasting tax payers´ money on these employees despite knowing more than 70 percent of the existing workforce cannot continue to work at the company even if it resumes operations after complying with the drugs regulator´s instructions. This is because they lack the required academic qualification of high school degree (SLC) to work at a GMP-compliant pharmaceutical company. It is said more than 200 of 279 employees at Nepal Drugs have not passed grade 10.
To reduce its liability, the government in the past had tried to introduce voluntary retirement scheme to retrench the workforce. But the finance ministry backtracked after the company demanded an "exorbitant amount" of Rs 579.1 million for the purpose.
Lately, the company´s new general manager, Nabin Kumar Jha, had tried to inject new lease of life in the drug manufacturer by using Rs 30 million extended by the government to renovate the production facility.
Since then it has floated a tender notice asking interested candidates to submit bids for revamping the production unit. But the work was interrupted after the government approached the PE Management Board to extend recommendations on operation modalities for the company.
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