File photo of interim Finance Minister Shamshad Akhtar
Caretaker ministers on Thursday sought to negate speculation on privatization of state-owned entities (SOEs), with the finance and privatization ministers conducting separate press conferences to outline their respective positions.
Interim Finance Minister Shamshad Akhtar, in her engagement with media, said the government would prioritize improving “viable” SOEs that were either already profitable or had the potential to attain profitability. In this regard, she said, the caretakers were reviewing a draft policy on SOEs circulated by the previous government and would advance “good work” therein.
She said the government had decided to grant all stakeholders another opportunity to submit their input on the draft policy, adding the amended draft would then be presented to the federal cabinet for final approval. According to Akhtar, the ministry has finalized a list of top 10 profitable entities and top 10 loss-making companies. The latter, she explained, would either be improved or added to the privatization list.
Lamenting that the poor performers had suffered from years of inefficiency, mis-governance and external interference, she said data covering the past three years had shown losses of over Rs. 500 billion annually. Some SOEs, she said, could improve with autonomy, a lack of external interference, and appointment of appropriate boards of directors and CEOs. She said a central monitoring unit (CMU) of the finance ministry was tasked with collecting and updating financial results of all SOEs within two months, adding it would not interfere in any day-to-day affairs but would take up issues with the cabinet committee on SOEs or the federal cabinet.
Referring to the SOE Governance and Operations Act legislated in February, she said it called for members of boards to be appointed on independent nominations and would be given security of tenure. The board would then be responsible for the selection of CEOs without any interference from the ministries concerned or the government except the policy guidelines approved by the federal cabinet. She said the government would retain strategic SOEs but phase out non-strategic ones, adding the draft policy called for the government to refrain from setting up any new SOEs unless they had strategic value. This, she explained, was part of commitments to the IMF.
Separately, Privatization Minister Fawad Hassan Fawad clarified the caretaker government had not added any new SOE to the list of privatization, adding it was only taking forward process of entities already included in the privatization program by the previous government.
Referring to media speculation, he stressed the interim government lacked the mandate to include any new entity in the active privatization list. On PIA, he said, the previous elected government had empowered the caretaker government to proceed with its privatization. He also noted that PIA incurred billions in losses annually despite having 96 attractive routes.
Some SOEs, he said, had gone through the privatization process already but had not fully privatized because of some legal issues. “We are removing those legal obstacles to complete the transactions,” he said, noting if the process were not completed in time, the government might have to pay damages to bidders who have already made payments.
Fawad said he had started reviewing the process of privatization of Pakistan Steel Mills with the financial adviser. He said four bidders had prequalified, but the process had been delayed due to COVID-19 and three had since withdrawn their offers.