Because of the inefficiency of the privatisation cell at the Finance Ministry and the lack of vision of the government representatives, the privatisation process of the Butwal Power Company has been cancelled at the last moment last week. The privatisation process of the Company was started nearly one year ago. The cancellation of the biggest company in the country is a big setback to the whole process of privatisation. This incident has simultaneously bared open the weakness of the privatisation cell of the Ministry and also the Adam Smith Institute.

A source at the Ministry says the privatisation cell needs even a single person who is capable. This consultancy of the Adam Smith Institute has also failed. Similarly, the privatisation of the Tea Development Corporation, also under the consultancy of the Adam Smith Institute, has also been a cul de sac.

Meanwhile, a recent report says there has been significant successes of the privatisation the process. The Public Enterprises, which were encompassed by the report, were privatised under the consultancy of an American firm.

According to the evaluation, 75 per cent of the shares of the Butwal Power Company, which has a sound financial and instrastructural base, were valued at Rs. 840 million. But due to the Privatisation Cell of the Ministry, the bidders failed to evalute the value of the shares at that amount.

Intercraft, one of the bidders, bid for Rs. 740 million and, according to the proposal submitted by it, 70 per cent of the amount would be paid immediately, while the remaining 30 per cent will be paid within two years under a bank guarantee.

Similarly, IPC had bid for Rs. 670 million, and 10 per cent of the amount would be paid immediately, while the remaining 90 per cent would be paid in seven years time with loans from the banks.

In its rejected bid, the Interacraft had said that it would buy the company in Rs. 840 million if there is a guarantee of Rs. 3.30 PPA or there is an consent for electricity distribution in 10 districts. The Ministry had asked Intercraft to increase its value by Rs. 100 million to its last proposal.

According to experts, if there was an auction, the amount could have reached to Rs. 1 billion.

When the privatisation process  got weakened, the bidders began pressurising through the power centres. The representatives of both the bidders are well-known business persons.

Not only the Norwegian Embassy in Nepal wrote pressing letter in favour of the Norwegian company, Intercraft, and the British Embassy in Nepal did the same in favour of  IPC, a British company, the local representatives of the companies also called their respective ministers here to pressurise the government here.

When the Finance Ministry could not be bear the pressure of the donor countries, it cancelled the whole pressure. The decision which came only two days after the IPC withdrew its proposal, clearly indicates outside pressure.

(Deshantar, December 12, Sunday)