Right move

The Commission for Investigation of Abuse of Authority (CIAA), the constitutional anti-graft body, has taken a welcome step in instructing the government to amend the Bonus Act that allows public enterprises (PEs) to distribute bonus for any year when they make a profit even if they have hefty accumulated losses and huge outstanding loans. The CIAA has rightly termed distribution of bonus by a company with accumulated losses as a case of gross financial indiscipline. Unfortunately, such cases are rife among our public enterprises. The latest case is Nepal Oil Corporation (NOC), where two trade unions colluded to demand bonus despite the corporation’s accumulated losses of around Rs 8 billion and outstanding debts of Rs 11 billion. Even more ludicrous was the move by these trade unions to halt distribution of petroleum products across the country after the NOC board revoked its decision to distribute bonus following intervention by the CIAA. Despite an almost identical scenario, another bankrupt PE, the state-owned Rastriya Banijya Bank, had won a legal right to distribute bonus, on the basis of the Bonus Act.



In 2004, the government had proposed a petroleum sector reform program to end NOC monopoly and induct the private sector into this business. It had even proposed formation of a petroleum authority to act as a regulatory body. The derailed proposal should now be revived in the larger interest of the country and to let the private sector play a proactive role in the petroleum products trade. It will be foolish to continue the status quo at cost to the taxpayer, who has suffered as a result of faulty and out-dated government policies. At a time when the government has opened up even the essential services to the private sector, there is no reason why it should continue to patronize NOC. By the same logic, PEs which are operating in the country for commercial purposes and suffering huge financial losses should not be shored up by the state, using up scare resources meant for extending basic services like health and education. Entry of the private sector implies better services, greater competency and reliability. At the same time, it is urgent to rid the PEs of all political interference that ultimately weakens their functioning. If the state limits its role to the essential services sector, leaving room for the private sector to take a lead in other areas, and keeps political meddling out of the PEs, a much better scenario will emerge, benefiting the people and the country’s economy. So, let’s not waste any time debating uselessly whether or not the state should keep on supporting a corrupt and incompetent institution like NOC. The private sector is now competent enough to handle the petroleum business.

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