Loan defaults by PEs total Rs 60.69 billion

31 Jan 2015, Kathmandu - State-owned enterprises have defaulted on loans worth Rs 60.69 billion out of the total amount of credit of Rs 140.21 billion issued to them by the government.

Out of the outstanding monies, Rs 32.43 billion or 53.45 percent is interest and the rest is

principal, according to the Annual Report the Government’s Share and Loan Investment 2013-14, released by the Financial Comptroller General’s Office (FCGO). The loan debts racked up by public enterprises (PEs) that have since been dissolved amount to Rs 1.33 billion.

Comparing the recovery and non-recovery ofloans , the recovery scenario is disappointing. The recovery of the principal is a little better than non-recovery while interest recovery is poorer than the non-recovered amount. According to the report, the government has recovered Rs 36.30 billion in principal and Rs 31.32 billion in interest.

Ramesh Shiwakoti deputy financial controller general at the FCGO said as most of the public enterprises have been incurring losses and performing badly for a long, the huge default of the government’s loan investment is natural.

“Nepal Electricity Authority, which occupies the largest amount of share and loan investment from the government, has long been facing losses and Janakpur Cigarette Factory has been closed down due to financial problems,” he said. “The financial situation of Nepal Drinking Water Corporation has been bad.”

The report has suggested penalising PEs failing to repay loans in time and encouraging those who have made loan repayments before the deadline with discounts. “If any enterprise delays providing dividend, it should be forced to pay

interest on dividend,” recommended the report. The government has made share investments of Rs 127 billion in various enterprises. The total loan and share investment stands at Rs 267.38 billion.

Despite the massive share investment, the government earned just Rs 8.83 billion in dividends in the

last fiscal year. Nepal Telecom accounted for 95 percent of the total dividends received in the last fiscal year, and the rest came form six other institutions.

Among the institutions in which the government has made share and loan investments, the Nepal Electricity Authority (NEA) comes at the top of the list in both categories. The government has poured Rs 54.67 billion in share investments in the NEA, said the report.

The government’s share and loan investments in public enterprises that have since gonebankrupt amount to Rs 2.7 billion. The government has lost Rs 1.33 billion in loans issued to them.