Fixing Nepal’s Loss-Making Public Enterprises

Nepal’s public enterprises (PEs) are profitable on paper in some sectors, but structurally weak in many others. The latest annual review of state-owned enterprises issued by the Ministry of Finance shows that, out of 43 publicly owned enterprises, 27 made profits during FY 2024/25, while the remaining 16 continued to operate at a loss. The net profit of profitable entities rose by 10.58 percent to Rs 48.89 billion, while losses among failing enterprises declined slightly by 4.14 percent to Rs 3.80 billion. Overall net profit climbed to Rs 45.08 billion from Rs 40.24 billion in the previous fiscal year, largely driven by the strong performance of Nepal Oil Corporation and three commercial banks. At the same time, however, the report exposes deep structural weaknesses in Nepal’s public enterprise ecosystem. Several state-owned companies, including Nepal Orind Magnesite Pvt. Ltd., Nepal Metals Company Ltd., and Butwal Spinning Mills Ltd., remain closed yet continue to incur administrative expenses. Dhauwadi Iron Company Ltd. has not even entered commercial operation but is already generating losses. Meanwhile, the government’s total investment in public enterprises surged by 13.44 percent to Rs 798.56 billion, with loan investments increasing sharply by 26.32 percent. Much of that borrowing is concentrated in the Nepal Electricity Authority.