By Staff Reporter
ISLAMABAD: The caretaker government is seeking to improve the performance of 85 state-owned enterprises (SOEs) that have the potential to pay dividends or become profitable, as it prepares for a possible privatisation drive to dispose of dozens of losing-making entities.
The interim finance minister, Shamshad Akhtar, on Thursday unveiled a draft policy for the governance and operation of SOEs, which have been a source of fiscal burden and inefficiency for the country.
The policy, which is still under review and consultation, aims to improve the performance, accountability, and transparency of SOEs, which span sectors such as energy, telecommunications, transportation, finance, and trade.
Minister Akhtar said at a press conference that the policy would classify SOEs into strategic and non-strategic categories and phase out the latter over time through privatisation or liquidation.
The ministry has finalised a list of the top 10 profitable entities and top 10 loss-making companies, which could be turned around and taken up for privatisation, but the minister did not name them.
The decisions have been taken based on three-year-old financial results, showing over Rs500 billion in annual losses in fiscal year 2020.
“The majority of the poor performers had been marred over the years by inefficiency, misgovernance, and external interference but the State-Owned Enterprises Governance and Operations Act of 2023 passed in February could not be implemented,” the minister said.
“The performance of the state-owned enterprises deteriorated because of a lack of autonomy, external interference, the appointment of inappropriate boards of directors and chief executive officers who did not meet the proper criteria, leading to a decline in their service quality and a massive drain on public resources.”
She said a central monitoring unit had been created in the finance ministry that would collect and update the financial results of all state-owned enterprises within two months and act as a hub for coordination with and monitoring of them.
She said the policy would empower the boards of directors of SOEs to make independent decisions, without ad hoc interference from the government or other ministries.
“The office of the chairperson of the board has to be separate from the chief executive officer,” she said. “Furthermore, SOEs are exempted from Public Procurement Regulatory Authority rules.”
Pakistan has also been discussing outsourcing operations of several of its state-owned assets to outside companies.
In March, it kicked off outsourcing of operations and land assets at three major airports to be run under a public private partnership, a move to generate foreign exchange reserves for its ailing economy.
The government has budgeted only about Rs15 billion in receipts from a stalled privatisation process in its budget for the fiscal year 2024.
Later on Thursday, caretaker privitisation minister, Fawad Hasan Fawad said there was only one bidder left for Pakistan Steel Mills.
He said that prior to Covid-19, there were four companies that were interested and qualified to bid for Pakistan Steel Mills (PSM), but three of them have backed out for a variety of reasons including global demand for steel.
“We will not be in favour of dealing with a single bidder, however, the cabinet is the competent forum to take a decision on this,” the minister told and news conference.
Fawad further said that the privatisation commission would continue discussion on the PSM in the light of recommendations of the financial advisor who were appointed in 2020.
The caretaker government was in talks with the financial planner appointed for the transaction; and that only PSM’s operational assets were up for sale, he said.
“The caretaker government would only continue the process of operation of the PSM and would not deal with the land of the PSM.”
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