Kathmandu, Jan 29 - Nepal Industrial Development Corporation (NIDC), an ailing state-owned financial intermediary which has been extending financial and technical support for establishment and expansion of industries, 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," Milam Bikram Shah, general manager of NIDC said on Saturday.
It has amalgamated various acts, namely Commercial Bank Act-1974, Agricultural Development Bank Act-1967, Finance Company Act-1985, Nepal Industrial Corporation Act-1990 and Development Bank Act-1996, to govern operations of different financial institutions.
"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 was known as one of the profit making financial intermediaries till 1995.
However, due to heavy political intervention and lack of farsighted managers, the corporation had started incurring losses after that.
Following this, the government had appointed
PriceWaterHouseCooper (PWHC), a renowned international accounting and consultation firm, to evaluate its assets and develop restructuring plan.
In its report prepared on July 2003, PWHC 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, building, 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.
The corporation currently employs 57 persons and has two regional offices, in Biratnagar and Pokhara.