How Public enterprises in Nepal are collapsing.

After appointing politically affiliated individuals with no experience to the leadership and management committees of state-owned public institutions, these individuals began to politicize the companies with the support of trade unions. Frequent changes in government due to unstable politics led to the manipulation of workers against officials from opposing political parties. Naturally, workers who should focus on daily operations became pawns in political interests, participating in strikes and protests, which resulted in decreased productivity. While workers were used to pressure management for better services, there was also pressure to hire more employees without regard for the company’s financial status, leading these institutions toward losses. Consequently, the government initiated various studies on the inability to manage loss-making institutions and concluded that they should be privatized.

The industries that play a positive role, albeit in small amounts, in stabilizing internal market prices through import substitution on behalf of the state need to transfer their efficiency to the private sector. After transitioning to the private sector, what measures can be taken to ensure the operation of these industries? What measures can be taken to protect national industries from global competition? There was a focus solely on selling industries without ensuring job continuity for workers as well. Consequently, after some time, their assets and land were sold, leading to the disappearance of those industries.

Historically, African citizens owned vast lands, but they were systematically influenced by religion to believe that faith would resolve all issues. As a result, they ended up with only religious texts while their land fell into feudal hands. Similarly, Nepal’s government industries were sold off, leaving workers without livelihoods.

Some institutions established by the state are still operational. Among these, some are running at a loss while others are facing potential losses. However, the state seems more focused on how to sell these institutions to the private sector rather than addressing their issues. Key sectors facing challenges in Nepal include production, energy, transport, construction, aviation, public enterprises, and telecommunications. Notably, the Basbari leather shoe factory, initially a fully government-owned enterprise with foreign assistance, has suffered from political interference and mismanagement, leading to its decline and eventual loss of identity post-sale.

When discussing such industries, the name of the Nepal Electricity Authority must be mentioned. Despite Nepal’s vast hydropower potential, delays in project construction have caused the state to miss significant opportunities cost for prosperity. If there were political will and capacity to fully utilize Nepal’s hydropower resources, we could have established ourselves as a prosperous nation in South Asia.
Current management of production, distribution, and transmission is inadequate; without improvements, existing political parties and the authority lack the capability to harness our full hydropower potential over the next century as well. Instability has also delayed or canceled private hydropower projects, with key initiatives like Arun and Budhi Gandaki remaining unresolved due to shifting political priorities.

The state of public transportation is equally dismal. Thai Airways and Nepal Airlines, which entered the aviation sector alongside Nepal, cannot even be compared. The national carrier suffers losses due to extreme political interference in management, overstaffing from politically motivated hiring, and the extreme political interests involved in aircraft purchases. Despite the potential for high profits in the foreign airline sector, they have failed to meet demand by leasing planes. Poor operational practices have led to unpredictable flights, causing the national flag carrier to fall to a secondary choice for its citizens. Political and management interests have hindered the lifting of flight bans to Europe, and the organization seems more focused on ground handling than on aircraft acquisition and operation.

When discussing public transportation, the previously operating Sajha and trolley buses had a significant presence in the public transport sector. However, due to extreme political interference and overstaffing created by politically motivated hiring, the government could not sustain these services. While a private sector transport initiative has successfully grown, the once reputable Sajha bus service now operates sporadically within limited areas. The inability to maintain the Hetauda-Kathmandu ropeway also reflects our political and managerial shortcomings.Similarly, the Nepal Food Corporation suffers from political interests, leading to overstaffing and inefficiency, leaving remote areas like Mugu, Humla, and Jumla constantly seeking food supplies.

The National Construction Company in the construction sector has been severely impacted due to extreme political interference and politically motivated hiring, resulting in overstaffing. Particularly in the context of infrastructure projects, political connections play a significant role in awarding contracts to private companies, leading to issues of bias and corruption. Consequently, this national company has been dismissed for political interests, highlighting systemic corruption as a serious concern.

The telecommunications industries can be considered part of the communication sector. Nepal telecom, where government owned approximately 92% stake on it. It faces political influence in its operations and strategic decisions, which has reduced its effectiveness and competitiveness. Despite having state protection, better infrastructure, and more customers, its revenue is lower than that of private providers. Extreme political interference and overstaffing have severely impacted the organization. Quality services have not reached remote areas, and while urban areas have 4G coverage, rural regions lack reliable service. With the government interference, the regulatory body has recently issued new licenses to Nepal Telecom without ensuring comprehensive coverage, neglecting rural citizens’ communication rights guaranteed by the constitution in the 21st century.

In summary, unhealthy competition between politics and business in Nepal has posed challenges to public companies since 1988. Personal conflicts among political leaders have created an unstable environment, obstructing good governance and economic development. Delays in essential law-making, rising corruption, diminished investor confidence, and irrelevant demands from politically protected trade unions have led to the decline of public companies and industries in Nepal. Although there have been attempts at reform, ongoing political instability continuously negatively impacts industrial operations. Leaders must prioritize national interests over personal rivalries to restore trust in public enterprises and create a conducive environment for economic growth.