The Privatization Policy of Nepal was introduced to enhance the efficiency, productivity, and competitiveness of public enterprises by transferring their ownership, management, or operation to the private sector. It is based on the belief that the private sector can operate businesses more effectively than the government, ensuring better use of resources and improved service delivery.
Privatization in Nepal began formally in the early 1990s as part of the economic liberalization program, aiming to reduce the financial burden of loss-making public enterprises on the government.
Objectives of Privatization Policy:
- Enhance Efficiency and Productivity:
Improve operational efficiency, profitability, and productivity of enterprises through private sector management and innovation. - Reduce Government Burden:
Minimize the government’s financial responsibility in managing and funding public enterprises that are inefficient or unprofitable. - Promote Private Sector Participation:
Encourage active participation of the private sector in industrial, commercial, and service activities to boost economic growth. - Generate Employment and Investment Opportunities:
Create new jobs and attract both domestic and foreign investments through privatization and industrial expansion. - Increase Public Ownership:
Offer opportunities for the general public to invest in previously state-owned enterprises through share distribution. - Improve Resource Allocation:
Ensure optimal and market-driven allocation of resources for higher productivity and economic efficiency. - Enhance Government Revenue:
Generate government income from the sale or lease of public enterprises and reduce public sector losses.
Methods of Privatization:
Nepal’s privatization process uses several approaches depending on the nature of the enterprise and market conditions. The major methods of privatization are:
- Sale of Shares (Public Offering):
The government sells shares of public enterprises to private investors or the general public through the stock market (e.g., NEPSE). - Asset Sale:
The assets of public enterprises, such as land, buildings, or equipment, are sold to private parties. - Management Contract:
The ownership remains with the government, but management responsibility is handed over to the private sector for efficient operation. - Lease or Concession:
Public enterprises or their facilities are leased to private companies for a specific period to operate and manage them. - Joint Venture:
The government partners with private or foreign investors to jointly manage and operate enterprises. - Liquidation:
Unviable or loss-making public enterprises are closed, and their assets are sold to recover funds.
