The government has invested a staggering Rs 930.88 billion in public enterprises (PEs) by the end of 2024/25, yet the returns remain negligible. This highlights the dismal state of the country’s PEs, many of which are struggling to stay afloat and have incurred heavy losses for the state. The total investment comprises equity and loans provided to 159 government-owned enterprises. Of these, 116 enterprises have received Rs 404.81 billion in equity. The Nepal Electricity Authority, Civil Aviation Authority of Nepal, Nepal Telecom, Rastriya Banijya Bank and Agricultural Development Bank are among the largest recipients. Government loans to PEs stand at Rs 526.06 billion — Rs 158.18 billion from domestic sources and Rs 367.88 billion from external sources. The NEA, Kathmandu Valley Water Supply Management Board, CAAN and Nepal Water Supply Corporation hold the highest loan liabilities. What is concerning is that despite such extensive funding, returns are far below expectations. Last year, the government recovered only Rs 2.62 billion in principal and Rs 5.29 billion in interest, even though it had invested Rs 41.48 billion. Currently, PEs owe the government Rs 400.08 billion, consisting of Rs 259.19 billion in principal and Rs 140.88 billion in interest — a sign that the gap between investment and earnings continues to widen.
According to the 2025 Annual Performance Review of Public Enterprises, the government achieved only a 2.4 percent return in 2023/24. Among 44 government-owned companies, 15 recorded heavy losses, while three have become dysfunctional. Due to poor performance, the government has begun privatising four enterprises, with three more in the pipeline. These figures indicate deep-rooted inefficiencies within the public enterprise sector. Many PEs have failed to generate enough revenue to service their debts. Structural flaws, compounded by persistent political interference, continue to undermine their performance. Without improvements in governance and management, further investment will not yield satisfactory returns. The government must re-evaluate and revise the policies that govern public enterprises. Setting clear objectives for each entity, along with strong monitoring of progress, would significantly improve accountability. Crucially, top management positions should be filled through a merit-based process to ensure that strategic planning and implementation are carried out by qualified professionals. Minimising political interference at operational levels would allow managers to work more efficiently and maintain higher standards of performance.
Privatisation may be suitable in certain cases, but it is not a universal solution. Many state-owned enterprises operate critical infrastructure and provide essential public services, and must therefore remain in operation even when they incur losses. The key is to improve governance, enhance accountability and modernise management practices so these enterprises can deliver better value for public money. With careful management, qualified leadership and clear targets, Nepal’s public enterprises could shift from being loss-making burdens to drivers of economic growth. Delay in policy reform, performance-based evaluation and professional management will only widen the existing gap between investment and results — with taxpayers bearing the cost. It is evident that when nearly Rs 1 trillion in public assets is managed effectively, PEs can contribute significantly to economic development rather than dragging it down.