Privatization is the process of transferring the ownership and control from public to private sector. It is the movement towards market economy for achieving greater productivity, efficiency and competitiveness.
Public enterprises came into existence with the aim of producing and distributing products and services of daily necessities at a reasonable price. During various planning periods, more than five dozens public enterprises were established to uplift the economy and different sectors of the nation. Most of the public enterprises become unable to operate their activities successfully as per their objective. These enterprises were adversely affected due to corruption, overstaffing, favoritism and hiring the non-professional employees. All of the reason lack of self-supporting and self-dependent to the enterprises. So, the government felt the need of reformation of these enterprises which lead to the privatization.Privatization is an approach to stabilizing and developing the national economy by strengthening the participation of private sector in nation building. It is the process of reducing the financial burden of the government transferring the ownership to the private sector. It aims to give the opportunity to the consumer to choose goods and services, according to their taste and requirements in terms of quality and price in open markets.

The policy of privatization in Nepal was specified for the first time in the sixth plan (2037 - 42). Such policy has been incorporated in all the subsequent development plans. The Nepal government followed the policy of privatization and economic liberalization to involve the private sector in the activities of different economic sectors. In according to plan the privatization program effectively, the government has regulated a privatization cell at the ministry of finance in 1989. Till now, 24 public enterprises have been privatized like Harisidhhi brick & shoe factory, Nepal film industry, Biratnagar jute mills, Raghupati jute mill, Hetauda textile industry, Butwal power company, Bhaktapur brick factory, Balaju textile industry, Bansbari leather & shoe factory etc.

Privatization of public enterprises is getting strong support from a business professional, government, general people, world bank and donors in the context of its goal of economic development and reduction of poverty. The majority privatized enterprises have been facing a serious problem in investment, production, income generation, employment, security and management. The privatized enterprises are lacking qualitative products due to inefficient production methods, inefficient manpower, and poor technology. Majority privatized enterprises are suffering from losses in their operation further these enterprises are facing a serious problem of security, corporate culture, and professional management.