Kathmandu: Nepal’s provincial governments have been found grossly negligent in managing billions of rupees worth of public assets under the country’s federal system. A recent report by the Office of the Auditor General reveals serious weaknesses in record-keeping, valuation, and protection of government-owned property across all seven provinces.
According to data from the Financial Comptroller General Office for the fiscal year 2024/25, provincial governments collectively hold fixed and inventory assets worth nearly Rs 40 billion. However, the report says there is no reliable integrated database, many properties have not been properly valued, and asset security mechanisms remain weak.
Among the provinces, Bagmati Province owns the largest volume of assets, valued at Rs 7.92 billion. It is followed by Lumbini Province with Rs 6.65 billion, Koshi Province with Rs 6.14 billion, Sudurpashchim Province with Rs 5.06 billion, Karnali Province with Rs 5.01 billion, Madhesh Province with Rs 4.76 billion, and Gandaki Province with Rs 4.35 billion in public assets.
Machinery and equipment account for the largest share of provincial assets at Rs 32.33 billion, while buildings and infrastructure make up Rs 2.51 billion. Other fixed assets are valued at Rs 2.66 billion, natural assets at Rs 2.41 billion, and valuables at around Rs 269,000.
The Auditor General has described provincial asset management as “high-risk” and warned that billions worth of public property are vulnerable to misuse, loss, and poor utilization. The report has urged provincial governments to immediately introduce clear laws and policies on asset management, ensure accurate entries into the Public Asset Management System (PAMS), reconcile asset records with financial statements, and revalue assets that have been recorded at either “zero” or “one rupee.”
Authorities have also been advised to formally transfer and document assets belonging to dissolved government offices, secure land ownership certificates for public properties, and purchase inventory only through proper planning and demand-based systems.
The report uncovered major discrepancies between official financial statements and the government’s asset management database. While the consolidated financial statements of the seven provinces show total assets worth Rs 40.98 billion, the PAMS database records only Rs 39.92 billion — a mismatch of more than Rs 1.05 billion.
Madhesh Province reported the largest discrepancy, with a gap of Rs 611.9 million between its financial statements and system records. Bagmati Province showed a difference of Rs 427.2 million, while Lumbini Province had a discrepancy of Rs 46.1 million. The report says such inconsistencies raise serious concerns about transparency and accountability in public asset management.
In one of the most alarming findings, 71 government agencies across the provinces recorded 2,984 public assets at either one rupee or zero value instead of determining their actual market worth, despite legal provisions requiring proper valuation. Altogether, these thousands of assets were officially valued at only Rs 2,427 on paper.
Bagmati Province alone had 1,064 such undervalued assets across 14 agencies, while Gandaki Province listed 234 similar assets through 16 agencies. The Auditor General warned that failure to update valuations even five years after the regulation came into force significantly increases the risk of misappropriation and disappearance of government property.
The report also highlights the growing fleet of government vehicles owned by provincial administrations. Provincial governments currently possess 11,752 vehicles, including 9,168 motorcycles and scooters, 2,393 cars, jeeps, and vans, and 191 buses and minibuses. The total purchase value of these vehicles stands at Rs 10.34 billion.
Bagmati Province owns the largest number of government vehicles, with 2,229 units worth nearly Rs 1.99 billion. Koshi Province follows with 2,175 vehicles valued at Rs 1.71 billion, while Lumbini Province has 1,930 vehicles worth Rs 1.57 billion. Madhesh Province reportedly holds 1,633 vehicles valued at Rs 1.88 billion. However, the report says many of these vehicles have not been revalued and are still recorded at unrealistically low prices.
Serious negligence was also found in the handling of assets belonging to dissolved or merged government offices. Assets worth nearly Rs 994.4 million from 14 ministries and agencies abolished by mid-April 2023 remain unmanaged and improperly transferred.
Of this amount, non-consumable assets account for Rs 662.3 million, while consumable inventory totals Rs 132.1 million. In Koshi Province alone, assets worth Rs 362.3 million belonging to four dissolved agencies remain in limbo. The report also found that 11 ministries were entered into the PAMS database under inconsistent or incorrect names.
Weak record-keeping of government land and buildings has added to the problem. Except for Sudurpashchim Province, none of the provinces was able to provide complete records of government-owned land and property. Sudurpashchim reported ownership of more than 611,000 square meters of land and 36 buildings under seven agencies.
In several provinces, federal offices transferred to provincial governments have not completed ownership transfer procedures, leaving official records incomplete. In some cases, one agency has been using land legally owned by another. The report also found instances where agencies with their own buildings continued to rent external properties for office use. Seven agencies alone spent Rs 65.47 million annually on office rent.
The Auditor General further pointed to major irregularities in inventory management. Across 1,341 offices operating under 902 provincial ministries and agencies, large stockpiles of consumable goods remain unused.
Inventory carried over from the previous fiscal year stood at Rs 5.05 billion, while additional purchases during the current year totalled Rs 11.78 billion. Despite this, only Rs 7.04 billion worth of goods were used, leaving stock worth Rs 9.79 billion unused.
More strikingly, 208 offices reported zero expenditure of consumable goods throughout the year despite holding inventory worth Rs 509.8 million from previous years and purchasing an additional Rs 461.1 million during the current year. The report suggests this indicates either excessive procurement or failure to maintain accurate usage records.
Although Nepal’s Constitution grants provinces authority over asset management and the national Public Financial Management Reform Strategy (2018–2028) calls for clear policies in this area, none of the provincial governments has introduced a dedicated provincial asset management law or guideline.
Due to the absence of a clear legal framework, provinces have failed to properly classify assets, apply scientific depreciation methods, or conduct market-based valuation. The report also found that fixed assets such as mobile phones, furniture, and software were often wrongly categorized as consumable expenses instead of long-term assets.
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