An official at the Ministry of Finance told myrepublica.com that the cabinet meeting held recently formed a high-level committee led by the Finance Minister to recommend new policy to liquidate non-functioning state-owned businesses. Five ministers representing ministries of Commerce and Supplies, Forest and Soil Conservation, Law and Justice, Industry and Agriculture and Cooperatives are the members of the committee that is expected to submit its final report by mid-January.
The government has reached to the conclusion that the present policy of privatization is not workable given that fact that privatization is not politically popular among all the major political parties. In addition, the poor performances of the PEs that were privatized during first-half of 1990s also greatly weakened the pro-privatization arguments, said the officials.
The committee that will have finance secretary as the member secretary will first thoroughly review the present status of 36 government enterprises to find out how many of them can be brought into operation by enhancing their competitiveness.
"The committee will then find out the PEs that the state should run even if they are financially not profitable from among the PEs that can be brought into operation," the official added.
The equity of that PEs that have financial viability but should not necessarily be run by the state will be gradually divested to interested private sector through transparent but competitive methods, the official added.
The committee is likely to recommend liquidation of the PEs that cannot be brought into operation and those which do not make any remarkable difference to the nation even if they are liquidated.
"The committee will recommend the government to initiate the process of dissolving and deregistering of the PEs falling into the category by settling all outstanding financial liabilities," the official added.
The committee will also look into the possibility of forming a central body to coordinate the PEs that the government thinks necessary and decides to continue their operation. "As per the present organizational structure, existing PEs are running under the command of different ministries and that there is no central level mechanism to coordinate and monitor overall performance of PEs," said the official.
Similarly, the committee will also set out policies on governance of board of directors of PEs and is likely to come up with a new mechanism to resist long-running political interferences in the functioning of PEs.
"There is a possibility of forming a central level committee that will be responsible for recommending potential chiefs of the PEs," said the official.
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