Government to Convert All Public Corporations into Companies

Kathmandu – The government has announced plans to convert all public corporations into companies, aiming to enhance transparency, efficiency, and accountability in the public sector. This major reform comes with the introduction of the Public Corporation Management and Good Governance Policy, 2082, unveiled by the Ministry of Finance on Sunday.

The new policy seeks to clearly separate the regulatory and service provider roles of public corporations. According to the ministry, this restructuring will be implemented gradually by amending the existing legal frameworks governing public corporations.

At present, only a handful of institutions — including Nepal Telecom, Rastriya Banijya Bank, Rastriya Jeevan Beema Company, and Rastriya Beema Company — are registered under the Companies Act. Under the current model, the government bears unlimited liability for these corporations, a situation the new policy aims to change.

Under the revised structure, public corporations will be classified into two categories: commercial and strategic. Commercial corporations will include those operating in sectors that directly compete with private enterprises. Strategic corporations, on the other hand, will consist of entities that are essential for implementing government policies and programs, fulfilling national or international obligations, or providing critical public services where private sector involvement is minimal or absent.

“The procurement process of public corporations that have to compete with the private sector will be simplified,” the policy states. Additionally, the government plans to make the boards of directors and management teams fully accountable for the overall decision-making and performance of their respective corporations, in line with existing laws.

To prevent political and bureaucratic interference, the policy also emphasizes operational autonomy. “A system will be put in place to ensure that the Government of Nepal does not interfere in the daily operations of corporations except when instructed,” the policy further notes.

The government also intends to restructure the boards of directors of public corporations to align with their organizational objectives, specifying clear roles and responsibilities. Furthermore, amendments will be introduced to allow board representation based on share ownership, ensuring greater alignment between ownership and governance.