SOEs register Rs265bn losses

ZAHEER ABBASI

ISLAMABAD: The state-owned enterprises (SOEs) have registered Rs265 billion in losses, despite getting Rs692 billion in support on account of subsides, cash development plan, and guarantee from the government, according to the Ministry of Finance.

An official said that Cabinet Committee on State-Owned Enterprises (CCoSOEs) meeting presided over by the Adviser to the Prime Minister on Finance, Dr Abdul Hafeez Shaikh, was informed by the Finance Ministry on Wednesday that during 2017-2018 fiscal year, 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.

Despite such a large support, the SOEs sector as a whole registered a net loss of Rs265 billion, the meeting held to discuss the governance reforms on the state-owned enterprises, and the reconstitution of the board of directors of Sarmaya-i-Pakistan Limited, was further informed.

Sarmaya-e-Pakistan was established to turn around the loss making SOEs, and its eight private directors were notified on March 4, 2019.

On Wednesday, the CCoSOEs meeting established a sub-committee headed by Minister for Industries and Production Muhammad Hammad Azhar to study the status and implementation of the recommendations of task force on austerity and government restructuring report on restructuring and re-organisation of the federal government.

The committee headed by Hammad Azhar would include representation from the Finance Division, the Privatisation Commission, and the Office of the Advisor to the Prime Minister on Institutional Reforms and Austerity.

Earlier, the meeting 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 had remained unsatisfactory, despite considerable financial support provided by the federal government from time to time.

The Ministry of Finance in its presentation 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 specialized skills in the line ministries for the management of commercial SOEs.

The ministry 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 of the committee of legal framework being developed for the liquidation, privatisation and retention under the government ownership on the basis of economic rationale and financial performance of the SOEs. Advisor to the Prime Minister on Institutional Reforms and Austerity Dr Ishrat Hussain briefed the meeting on the gist of proposals of the task force on austerity and government restructuring report on restructuring and re-organisation of the federal government.

He opined that the task force proposals, which had already been approved by the federal cabinet and were being implemented at different levels by the federal government, 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 re-organised and retained by the government or merged with other entities.