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This policy analysis paper takes a look at two of the thirty six existing public enterprises - Nepal Airlines Corporation (NAC) and Hetauda Cement Industry Limited (HICL) - in Nepal to propose concrete policy options for reform. Both NAC and HICL have been facing high cumulative losses and presence of unfunded liabilities due to operational inefficiencies and other problems. This paper analyses the poor performance of public enterprises from a policy perspective with an aim of identifying practical reform options and these reform options are mainly focused on improving the organizational efficiency either by bringing changes in the current working modality or by introducing a new modality based on a cost benefit analysis. The larger objective of conducting such analysis on two loss making PEs is to pave way for similar analysis of other public enterprises which are increasingly becoming a burden on taxpayers and consumers.