Committee constituted to monitor privatisation status

ISLAMABAD: The government on Wednesday set up a subcommittee to check the status of divestment from lossmaking state-owned enterprises in line with recommendations of Ishrat Husain-led taskforce report.

The Cabinet Committee on the State-owned Enterprises constituted the subcommittee headed by Minister for Industries and Production Hammad Azhar to study the status and implementation of the recommendations of task force on austerity and government restructuring report on restructuring and reorganisation of the federal government.

The sub-committee would also include representation from the finance division, Privatisation Commission and the office of the Adviser to the Prime Minister on Institutional Reforms and Austerity Husain.

The cabinet committee discussed the governance reforms on the state-owned enterprises (SOEs) and the reconstitution of the board of directors of Sarmaya-i-Pakistan Limited.

The meeting was told 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 Rs143 billion was provided to various SOEs as subsidies, Rs204 billion as cash development loan, Rs27 billion as equity injection and government guarantees amounting to Rs318 billion were issued during FY2017/18. Despite such support, SOEs sector as a whole registered net losses of Rs265 billion.

The ministry of finance attributed the poor performance of the 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 the line ministries for the management of commercial SOEs.

The meeting was apprised 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.

The meeting was told about legal framework being developed for the liquidation, privatisation and retention under the government ownership on the basis of economic rationale and financial performance of SOEs.

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