Revival of cash-bleeding SOEs: Govt moves summary to appoint BoD for SPL

ISLAMABAD: In a bid to replicate Malaysian and Singapore model to revive cash-bleeding state-owned enterprises (SOEs), the government has forwarded a summary for appointing 11 members on board of directors of newly established Sarmaya-e-Pakistan Limited (SPL) with strong possibility of private sector business tycoon as chairman of the company.

“Yes, a private sector business tycoon will be appointed as chairman of this new company as a summary has been forwarded to the cabinet for getting final approval,” said a top official of the government while talking to The News here Saturday.

The board of directors in its first meeting will take decision about those cash bleeding entities which will be taken over to revive in first phase. Official sources said the oil and gas sector companies will be among those that might be taken over by this new entity.

With paid up capital of Rs100,000 for this new holding company, the government has not yet shared anything about implementation plan to convert loss making into profit making entities with timelines.

The PTI-led government had shelved plan to privatise some of the major loss-making entities such as PIA and Pakistan Steel Mills and power sector distribution companies, but decided to revive them through creation of wealth fund in a bid to run these entities out of clutches of bureaucratic hurdles in line with the manifesto of the PTI.

The government took over six months to register the company with the SECP at a time when around 197 SOEs in totality are making net losses on daily basis.

The Ministry of Finance admitted in its official report that SOEs turned into net loss making in 2015-16 when their net loss stood at Rs44 billion as earlier these entities were running into net profits.

It was first time in recent history of the country when the SOEs run into loss-making entities on net basis collectively.

The government has nominated three officials including the Finance, Industries and Division secretaries as members of board of directors, while eight other members from private sector will be made part of the BoD after getting approval of the federal cabinet.

Finance Minister Asad Umar Friday tweeted “Sarmaya-e-Pakistan, the holding company for state-owned enterprises, (has been) incorporated. Turning around the state-owned enterprises and eliminating their losses, which are eating up resources which should be used for development and welfare, is vital for economic turnaround of Pakistan.”

The net profit was turned into net loss for whole 197 SOEs and the national exchequer faced a loss of Rs44.772 billion in FY-2016. The actual loss is largely a result of the losses booked on the balance sheet of power distribution companies (Discos). Top ten cash bleeding SOEs have caused accumulated losses of Rs225.9 billion just in one year. The national flag carrier PIA tops among ten deficit bearing entities as it faced losses of Rs45.276 billion.

The PIA faced deficit of Rs45.276 billion, Quetta Electric Supply Company (Qesco) Rs34.608 billion, Hyderabad Electric Supply Company (Hesco) Rs27.246 billion, Pakistan Railways Rs26.994 billion, Sukkur Electric Power Company (Sepco) Rs21.739 billion, Pakistan Steel Mills Rs18.757 billion, Peshawar Electric Supply Company (Pesco) Rs14.508 billion, Faisalabad Electric Power Company (Fesco) Rs13.311 billion, Lahore Electric Supply Company (Lesco) Rs11.184 billion and Multan Electric Power Company (Mepco) Rs10.294 billion.

Among top ten profit-making companies, OGDCL clinched first position by making profit of Rs59.971 billion and National Bank of Pakistan (NBP) earned profit of Rs22.752 billion and stood at second position. The remaining profit-making entities included Wapda, Parco, Government Holding Private Limited (GHPL), PPL, PSO, Gepco, NTDCL and Pak-Kuwait Investment Company.

The female participation in the overall BOD needs to be strengthened as less than 5 percent females are represented in the Board.