KATHMANDU: The government has decided to classify public institutions into two categories, commercial and strategic, according to the recently issued “Public Institutions Management and Good Governance Policy, 2025.”
The policy, approved by the Cabinet on September 28, states that public institutions competing with the private sector will be classified as commercial institutions. Strategic public institutions will include those providing essential services where private sector involvement is absent or institutions fulfilling national and international obligations.
The policy also envisions transforming all public institutions into a company model. “The legal basis for establishing public institutions will be modified, and all institutions will gradually be converted into companies,” the policy states.
Key provisions include separating regulatory and operational functions, introducing board representation based on shareholding, fully digitizing financial transactions, and ensuring private sector participation without conflicts of interest. Unnecessary or irrelevant positions will be eliminated following organizational surveys.
The policy also outlines procedures for appointing officials, amending formation orders, charters, and bylaws, and converting institutions established under various laws into companies under the Companies Act, 2006.
Currently, out of 45 public institutions, 20 are fully government-owned and 25 are majority-owned. Six institutions have no commercial operations, while two remain inactive. Among active institutions, 28 are profitable, while 15 operate at a loss.
The policy aims to strengthen competitiveness, ensure efficient production and delivery of quality goods and services, and improve the financial and operational performance of public institutions.
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