Yangyel Lhaden

The finance ministry has been working on merging State-owned Enterprises (SoEs) with similar mandates and duplication of work and considering even the privatisation of non-strategic SoEs, Lyonpo Namgay Tshering told the National Assembly yesterday.

“During the review, SoEs formed during the second government’s tenure were found to be created to fulfill their pledges and not based on Public Finance Act,” he said.

“We have not created a single SoE during our tenure,” the minister said.

The government, he said, has approved the merger of National CSI Development Bank Limited with Bhutan Development Bank Limited to strengthen rural lending capacity, reduce costs, and protect stakeholder interests.

Earlier, the finance ministry also transferred Royal Bhutan Helicopter Service to Drukair Corporation and the business of the Bhutan Livestock Development Corporation has been remodeled into dealership.

Presenting the review report of the non-performing state-owned enterprise (SOE) in 10th session of National Assembly yesterday, the minister said that it is important to know why SoEs were established in the first place.

He said that SoEs are established as per the Public Finance Act of Bhutan 2007, which requires the government to form SoEs to benefit the public when there is a monopoly; when some activities cannot be taken up by the private sector; and to control prices in the market.

“Most SoEs under the ministry have social mandates rather than making a profit,” he said.

If the government asks SoEs with a social mandate to make a profit rather than carrying out their duties, then the minister said that they won’t benefit the public. “Instead, it is important for the government to supplement and support SoEs which have a social mandate.”

The finance ministry’s rationalised subsidies to the SoEs for the fiscal year 2023-2024 amount to Nu 836.7 million (M), which is 64.57 percent lower than the subsidy released during the fiscal year 2018-2019, which was Nu 2,361.28M.

The subsidy from the government to SoEs has been decreasing over the years with Nu 2,277.49M in 2019-2020, Nu 2,092.93M in 2020-2021, Nu 2,140.98M in 2021-2022, and Nu 1,140.23M in 2022-2023.

The equity from the government to SoEs has also reduced sharply from Nu 212.6M in fiscal year 2021-2022 to Nu 84.454M in fiscal year 2022-2023.

There are 14 SoEs under finance ministry. In the summer session of parliament, Economic and Finance Committee of the National Assembly recommended immediate closure of four SoEs— Bhutan Livestock Development Corporation Limited, Farm Machinery Center, Food Corporation of Bhutan, and Kuensel Corporation, stating that their mandates could be fulfilled by the private sector and that they were running in losses.

Finance Minister Namgay Tshering said that during deliberation in the assembly, it appeared that SoEs have failed to do their duty when they can’t make a profit, which may not be the case because their mandate is different.

“The ministry has almost completed the pay revision review for SoEs, which will be submitted to the government soon,” he said.