Government hesitation to act and employee agitation stem from a history of bitter experiences. Nepal’s post-1990 liberalisation boom saw the then-ruling NC initiate a wave of privatisation, albeit with disastrous results.
Most newly-privatised companies, such as Gorakhkali Tyre, Bhrikuti Paper, Harisiddhi Bricks, and Bansbari Leather Shoes were unable to cope with the ownership change and folded.
As a result, the state has shied away from concrete action on privatisation even if it would remove immense financial burdens. Now, with the NC back in government, there is a chance Nepal Airlines de-nationalisation could be in the cards — even though the worst scandals in the carrier’s history have involved NC politicians.
To be sure, Nepal has had privatisation success stories too, with the likes of Nepal Telecom, Nepal Bank, Electricity Generation Company, Rastriya Banijya Bank and Timber Corporation Nepal all in profit, and they have improved their service after switching to a company model.
The airline’s Board of Directors move to privatise was based on a report by the Corporation Reform Committee in mid-September 2019 to then Aviation Minister Yogesh Bhattarai.
‘Preparations must be made to convert the Corporation into a limited company under prevailing laws,” the report said, while also recommending restructuring ownership so that 51% of the airline remained in government hands.
‘Once the company is set up, ownership must be structured and shares distributed in such a way that it gives ⅓ of total paid-up capital to those responsible for management while sharing the rest among industries in tourism, local banks and financial agencies, company employees, the government and the general public,’ the Advisory Committee’s report notes.