The government first decided to close down the Nepal Transportation Corporation, Orient Magnesite Limited and the Cottage and Handicraft Industries Sales Depot. And, recently it came up with the decision to shut down Sajha Yatayat.

These public enterprises have been in the red for quite a long time. The hundreds of employees working with these enterprises will be laid off, and the government will end up paying a large sum of money to former employees of these enterprises in the form of accumulated salaries and gratuities. The government has already spent about Rs 3 billion to pay one-year salaries to 295 employees of the Nepal Transportation Corporation. According to the spokesman of the Ministry of Labour and Transportation Dhruba Kumar Sharma, the government needs to cough up Rs 20 billion to cover the gratuities and other facilities former NTC employees are entitled to. Similarly, the government needs Rs 11 billion to pay off the the 226 employees of Orient Magnesite and 137 employees at the Cottage and Handicraft Industries Sales Depot. And finally, there are the 800 Sajha Yatayat employees to deal with.

The government is adopting the policy of privatisation as a panacea for the structural ills of these enterprises, such as lack of able management, lack of opportunities to employees to upgrade their skills, corruption and poor performance. But the process has taken some time to pick up speed. The Ninth Five-Year Plan envisaged the privatisation of 30 public enterprises by 2002, but only the Nepal Tea Development Corporation was privatised in this period.

The government has called for technical and economic proposals from interested parties to privatise Hetauda Textile Industries. The bid call requires the interested parties to deposit Rs 1.5 million for Nepalis and $20,000 for foreigners. The deposit will be expropriated if the successful bidder fails to sign an agreement within four months of the government's decision.

The government has also decided to lay off 50 percent of the employees from the Nepal Timber Corporation. The Finance Ministry says that the government is spending Rs 21 billion on this, and people presume that the corporation will soon be privatised. It is also presumed that the government will soon announce its intention to privatise the Lumbini Sugar Factory, Birganj Sugar Factory, Himal Cement Factory and Bhaktapur Brick and Tile Factory.