Cabinet body mulls ways to reform bad-performing SOEs

ISLAMABAD: The Cabinet Committee on the State-owned Enterprises (CCoSOEs) met on Wednesday to chalk out ways to reform loss-making state enterprises and to discuss the reconstitution of Sarmaya-i-Pakistan Limited’s Board of Directors.

The meeting, which was chaired by Adviser to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh, decided to set up a sub-committee, to be headed by Industries and Production Minister Muhammad Hammad Azhar, to study the status and implementation of recommendations by the Task Force on Austerity and Government Restructuring Report on restructuring and reorganisation of the federal government. 

Earlier, the CCoSOEs was informed by the Ministry of Finance that around 85 commercial SOEs were working under the administrative control of 19 federal ministries/divisions “but the overall performance of the SOEs remained unsatisfactory despite considerable financial support provided by the federal government from time to time”. 

The meeting was further informed that during FY18, an amount of Rs143 billion was provided to various SOEs as subsidies; Rs204 billion as cash development loan, Rs27 billion as equity injection and Rs318 billion in GoP guarantees. Despite such large support, the SOEs sector as a whole registered net losses of Rs265 billion.

The finance ministry attributed the poor performance of SOEs to various factors, particularly redundancies and duplications, a completely decentralised governance framework with lack of inter-agency coordination, excessive interference and over-regulation by multiple government agencies, and lack of technical expertise and specialised skills in line ministries for the management of commercial SOEs. 

It also briefed the CCoSOEs on various steps taken for reforms and improvement in the SOEs governance framework, including Sarmaya-i-Pakistan and structural benchmarks agreed with the international financial institutions. It further updated the members that a committee on legal framework was being developed for the liquidation, privatisation and retention under the government ownership on the basis of economic rationale and financial performance of SOEs. 

Advisor to PM on Institutional Reforms and Austerity Dr Ishrat Hussain briefed the meeting on the list of proposals of the Task Force on Austerity and Government Restructuring Report on restructuring and reorganisation of the federal government. 

He said that the task force’s proposals, which had already been approved by the federal cabinet and were being implemented at different levels, could be a starting point for the CCoSOEs to see and decide which SOEs were to be privatised, which to be liquidated, wound up or closed down and which were to be reorganised and retained by the government or merged with other entities.