KATHMANDU, Dec 8, 2011
The government has agreed to provide a sum of around Rs 80 million to Nepal Drugs Limited (NDL) to clear the state-owned company´s debt at Nepal Credit and Commerce (NCC) Bank.
The decision to extend the amount will prevent the bank from auctioning off the pharmaceutical company´s property in Babar Mahal of Kathmandu.
The company had pawned 6 ropanis (3,052 square meters) of land located at the prime location of Babar Mahal more than five years ago to get a credit of more than Rs 70 million - most of which was used in covering its overhead expenses.
However, it started deferring installment payments from the beginning due to weak financial health - a result of inefficiency, lagging productivity, unnecessary government intervention and overstaffing. Then some three years ago it was forced to close down its operations by the Department of Drugs Administration (DDA) after it failed to comply with international drug manufacturing practices. Since that time the government had taken over the responsibility of repaying back the loan amount.
“The amount that we are extending this time is the final tranche which will clear the company´s debt at the NCC Bank,” Suresh Regmi, under secretary of the Ministry of Finance, told Republica.
The NDL is one of the troubled state-owned enterprises which had shut down its operations after the DDA prohibited it from manufacturing medicines citing it was not following Good Manufacturing Practice (GMP) recommended by the World Health Organization.
The GMP is a set of guidelines that among others outlines production aspects so that companies do not compromise on quality while manufacturing drugs. Since Nepal´s drugs regulator - the DDA - also uses WHO´s GMP to gauge the standard of drug companies´ production facilities, it had instructed the NDL to shut down its operation unless it upgraded its manufacturing unit.
So far, the recommendation of the DDA has not been followed, meaning the company is virtually closed and is not making any money. Yet the government has not removed the company´s staff from its payroll, adding financial burden of around Rs 4 million on the taxpayers every month.
The irony is that the government has not let them go despite knowing it can´t keep more than 70 percent of the workforce of 279 even if the company resumes operations after overhauling its production facilities. This is because they lack the required academic qualification to work at a GMP-compliant pharmaceutical company.
To send off these staff members under the voluntary retirement scheme, the company has asked for around Rs 570 million. “But the government is yet to decide on this,” Regmi said.
The company also needs another Rs 560 million to revamp its production facilities and infrastructure so as to meet the international standard - an amount which, according to a study conducted by the government, can be recouped within five years of resuming operation. But the government still has not taken any decision on whether to release this amount.
Source: Republica
The government has agreed to provide a sum of around Rs 80 million to Nepal Drugs Limited (NDL) to clear the state-owned company´s debt at Nepal Credit and Commerce (NCC) Bank.
The decision to extend the amount will prevent the bank from auctioning off the pharmaceutical company´s property in Babar Mahal of Kathmandu.
The company had pawned 6 ropanis (3,052 square meters) of land located at the prime location of Babar Mahal more than five years ago to get a credit of more than Rs 70 million - most of which was used in covering its overhead expenses.
However, it started deferring installment payments from the beginning due to weak financial health - a result of inefficiency, lagging productivity, unnecessary government intervention and overstaffing. Then some three years ago it was forced to close down its operations by the Department of Drugs Administration (DDA) after it failed to comply with international drug manufacturing practices. Since that time the government had taken over the responsibility of repaying back the loan amount.
“The amount that we are extending this time is the final tranche which will clear the company´s debt at the NCC Bank,” Suresh Regmi, under secretary of the Ministry of Finance, told Republica.
The NDL is one of the troubled state-owned enterprises which had shut down its operations after the DDA prohibited it from manufacturing medicines citing it was not following Good Manufacturing Practice (GMP) recommended by the World Health Organization.
The GMP is a set of guidelines that among others outlines production aspects so that companies do not compromise on quality while manufacturing drugs. Since Nepal´s drugs regulator - the DDA - also uses WHO´s GMP to gauge the standard of drug companies´ production facilities, it had instructed the NDL to shut down its operation unless it upgraded its manufacturing unit.
So far, the recommendation of the DDA has not been followed, meaning the company is virtually closed and is not making any money. Yet the government has not removed the company´s staff from its payroll, adding financial burden of around Rs 4 million on the taxpayers every month.
The irony is that the government has not let them go despite knowing it can´t keep more than 70 percent of the workforce of 279 even if the company resumes operations after overhauling its production facilities. This is because they lack the required academic qualification to work at a GMP-compliant pharmaceutical company.
To send off these staff members under the voluntary retirement scheme, the company has asked for around Rs 570 million. “But the government is yet to decide on this,” Regmi said.
The company also needs another Rs 560 million to revamp its production facilities and infrastructure so as to meet the international standard - an amount which, according to a study conducted by the government, can be recouped within five years of resuming operation. But the government still has not taken any decision on whether to release this amount.
Source: Republica
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