Nepal is a land locked country and home place of natural beauty with terraces of artifacts. Nepal is one of least developed agricultural country of the world. Area of the kingdom of Nepal is 147,181 sq. km. situated in the lap of Himalayas. Nepal is located in between the latitude 26022' N to 300 27' North and longitude 800 4' E to 88012' East and elevation ranges from 90 to 8848 meters. The average length being 885 km. east to west and average breadth is about 193 km. north to south. The country is bordering between the two most populous countries of the world India in the east, south, west and China in the north. The northern range (Himalaya) is covered with snow over the year where the highest peak of the world, the Mount Everest, stands. The middle range (Hill) is captured by gorgeous mountains, high peaks, hills, valleys and lakes. The Southern range (Terai) is the gangaitic plain of alluvial soil and consist of dense forest area, national parks, wildlife reserves and conservation areas. The temperature diversity and rainfall differ from place to place. In the geographic diversity and varied climatic conditions 24.8 millions people of more than 60 caste/ethnic groups are accommodated in the country.
Economic growth of the country has not improved substantially over time to overtake population growth. As the current population growth is 2.25 percent per year, the gain achieved by development activities has been overshadowed by growing population. Little over half (58.2%) of the population of working age reported usually economically active in 2001. Population Census 2001 reports that 53.1 percent population of age 10 years & over are employed and 5.1 percent are unemployed, Contribution of non agricultural activities are gradually increasing in the GDP.
'Like most other developing countries, one of the most important aspirations of Nepal has been to bring about a structural change that would transform its agricultural economy into industrial one.' (Regmi:2)
'Industrialization is universally accepted as a strong vehicle of economic development.' (Ibid:35) 'Industrialization when promoted in effcient lines, it can holdout prospects of abundance of manufacturing goods increased employment, fuller utilization of natural, capital & human resources of the country; improved balance payment and above all greater efficiency and modernization through out the economy.' (Thapa, 1974:25)
Nepal's entry into industrialization was late. The first industrialization initiative was from the private sector spurred by the scarcity of goods created by the World War II. But its pace was very slow. The actual process of industrialization began since the early 1960s. To accelerate the process of the industrialization and to play a catalytic role in the promotion of economic growth, most of the public enterprises in Nepal were set up in the 1960s and 1970s funded mainly through foreign assistance. (Rastra Sewak, 1995)
Due to lack of sufficient capital, technical know how and greater risk in infrastructure, public utility and innovative industrial sectors, private entrepreneur is unable to come forward to invest in these sectors. For this reason, Public enterprises play role in pursuing the industrial activities of the country.
Public enterprises were established as a strong vehicle of socio-economic development after Second World War in the developing and underdeveloped countries. Nepal could not remain untouched by this trend. As a result many public enterprises were established in the country owing to the government leadership economic development of the country.
Nepal Bank Limited was the first public enterprise to have a separate legal entity in Nepal. Nepal has started her planned development since 1956 (AD). Since then, numbers of public enterprises have increased substantially during different plan periods.The most of public enterprises are established on adhoc basis to solve the immediate problem rather on than planed basis. So they fail to achieve goals & objectives of the enterprise and national goals. For so many other reasons Nepalese public enterprises has been suffering from poor performance. So the government has started privatization program.