The Bhutanese Leading the way.
The Budget Report of FY 2023-24 highlights the performance of SOEs and the loan exposure.
There are thirteen SOEs directly under the MoF, including eleven wholly-owned and two majority-owned.
MoF SOEs made contributions of Nu 245.5 million (mn) in 2022 in the form of taxes and dividends. The losses suffered by 9 SOEs are what caused the tax contribution to drop from Nu 201 mn in 2021 to Nu 92.5 mn in 2022.
However, due to improved revenue performance in Bhutan, the dividend contribution grew from Nu 110 mn in 2021 to Nu 153 mn in 2022 from Bhutan Duty Free Limited and Lottery Limited.
In comparison to the previous year, the combined net asset of SOEs as of December 2022 was Nu 8,480 mn, a decline of 10 percent.
Nu 700.8 mn was given to SOEs as subsidies in the FY 2021–22. The expected subsidy transfer for FY 2022–23 is Nu 412.3 mn, a 41.2 percent drop from the prior year. the decline was primarily caused by a decrease in the operational subsidy provided to FCBL and FMCL.
Despite this, the Government is reducing subsidy assistance for the SOEs in a stepwise manner while highlighting the necessity of their financial sustainability. Furthermore, the effort to address financial discipline and the transition of the SOEs’ perspective from one of social responsibility to one of business will be essential to their long-term financial viability.
The SOEs can optimize operations, increase efficiency, and make wise financial decisions by taking a more business-focused stance, which will ensure their viability in the cutthroat market environment.
DHI, the commercial investment arm of the government, is guided by a Royal Charter and holds centralized ownership over the SOEs with the MoF owning 100 percent of shares in DHI. DHI is mandated to play a role in promoting a resilient and diversified economy.
From Nu 8,357 mn in FY 2021 to Nu.10,565.6 mn in FY 2022, DHI’s revenue climbed by 26 percent. The main cause of the increase was the 27 percent increase in dividends from subsidiary firms, from Nu 8,025.7 mn in FY 2021 to Nu 10,171 mn in FY 2022.In line with this, spending grew by a further 36 percent to Nu 207 mn in 2022 from Nu 152.2 mn in 2021. Costs associated to employees increased, which was the main reason for the increase.
During the year, DHI contributed Nu 7,089.8 mn to the domestic revenue in the form of taxes (Nu 3,112.8 mn) and dividend (Nu 3,977 mn), which is an increase of 29 percent as compared to the previous year mainly on account of increase in dividend from the Bhutan Telecom, BPC, SMCL, BFAL, and investment from abroad. The total revenue (taxes and dividend combined) contribution from the DHI amounted to 17.4 percent of the total domestic revenue.
In 2022, the total assets of the DHI grew by 11 percent to Nu 77,184.1 mn from Nu 69,312.5 mn in 2021. It was mainly attributed to an increase in capital work in progress (Nu 2,956.4 mn) and long-term financial assets (Nu 2,526.5 mn).
DHI produced gross revenue of Nu 62,206.8 mn as a group, an increase of 14 percent from Nu 55,447.7 mn in FY 2021. The growth in revenue from Bhutan Power Corporation Limited, Drukair Corporation Limited, and State Mining Corporation Limited is credited for the rise in national budget financial year 2023–24.
However, the profit after tax fell from Nu 11,650.9 mn recorded in FY 2021 to Nu 11,073.5 mn, a 5 percent decline. However, Nu.8, 010.7 mn was sent as the Group CIT for the entire year. The SMCL also made a royalty and license fee contribution of Nu 495.1 mn. Similar to this, in FY 2022, DGPC paid Nu 2,348.7 mn to MoF as a royalty through payment.
The interest subsidy (Drukair Corporation Limited (DACL) and subsidies channeled to residents through businesses (Bhutan Power Corporation Limited (BPCL) and Royal Insurance) are among the subsidies given to DHI enterprises.
The total amount of subsidies given to DHI enterprises in FY 2021–22 was Nu 1,656.9 mn. BPCL was given a subsidy of Nu 1,471 mn for domestic power tariff, Nu 103.8 mn for the DACL, and Nu 82.2 mn for life and home insurance for rural residents.
In terms of exposure, based on the shareholding pattern, the Government’s share of SOEs debt was 97.5 percent of the total SOE debt amounting to Nu 40,720.4 mn.
