NIDC to be converted into company

January 29, 2006
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The Nepal Industrial Development Corporation (NIDC), an ailing state-owned financial intermediary is all set to be converted into a company.

“The corporation has already initiated necessary process to register itself as a financial company of class ‘B’ as per the Bank and Financial Institutions Ordinance (BAFIO). Soon after completion of the registration process, it will start functioning as a public company,” reports quoted Milam Bikram Shah, general manager of NIDC as saying.

“Once the corporation is enrolled in the new system, its own act promulgated in 1989 will be automatically annulled and will have to function as per conditions laid in the ordinance,” Shah said.

An official at the Ministry of Finance also said that the government will start privatization process of the corporation soon after NIDC is converted into a company.

“A private accounting firm has already been hired to evaluate its assets and once it submits the report, we will determine the privatization modality,” he added.

Established in 1959 through ‘Special Charter Act’, NIDC has been extending financial and technical support for establishment and expansion of industries.

It was known as one of the most profit making financial intermediaries till 1995. However it started to bear losses due to political intervention and various other reasons.

Price Water House Cooper (PWHC), a renowned international accounting and consultation firm, in its report prepared on July 2003, had suggested the government to liquidate the corporation within a two-year period.

The corporation currently possesses assets worth Rs 4.83 billion, including land, buildings and credit and share investment, whereas its liabilities stand at Rs 1.76 billion.

According to officials, although NIDC had managed to generate an operating profit of Rs 120 million, Rs 61.3 million and Rs 55.3 million in fiscal years 2002/03, 2003/04 and 2004/05, respectively, the corporation’s cumulative loss stands at Rs 870 million, according to the Kathmandu Post daily.