SOEs’ sell-off: Govt needs to come up with better law: Miftah

ISLAMABAD: Finance Minister Miftah Ismail on Wednesday said that the government would be required to come up with a better privatisation law to privatise the state-owned enterprises.

While addressing the seminar on Improving the Corporate Governance and Performance of SOEs organized by the Finance Division, the finance minister said, “Perhaps the privatization law is not the right law and is not allowing privatization of these entities.”

He said there is a need to work on two things to come up with a better law to the extent of privatization and to the extent of improving their governance to ensure right laws which govern these enterprises.

The minister said that Pakistan has a persistent issue with the SOEs as some of them are badly managed and some of them are essential for public service but have not been able to provide public service at the level that is required by them and are causing a lot of issues in the budget.

Ismail said that unfortunately the country’s privatisation policy has not succeeded over the years and one bank, SME, has been in losses since 2007 but despite the efforts, the government failed to privatise it for the last 15 years.

The minister also stated that there is another asset, Roosevelt Hotel, which is open for privatization since 1996 but could not be privatized for the last 26 years and there may be some others as well.

The minister said that certainly, the people who work for these SOEs are very competent professionals as he had the chance of working with them in the PIA and the SSGC. The minister said that these outstanding professionals whether in the PIA, the Sui companies, and especially in the distribution companies, have not been able to perform well. The finance minister said maybe this is to do with the government laws that restrict them in the way they are governed and cause them not to be as efficient as they could be in the private sector.

SOEs: PM irked by inordinate delay in sell-off process

The finance minister said that a staff-level agreement was signed with the International Monetary Fund (IMF) that envisages extending the programme for the whole year and also increased the amount by $1 billion.

He further stated that Pakistan expects $4 billion disbursement by the IMF over the year as prior actions including passage of the budget and signing of the MOU with the provinces have already been met.

The prior condition for increasing of petroleum levy has been increased from July 2022 and the power tariff annual rebasing has been done a couple of days ago.

The minister said that the interest rate and the DLTL prior conditions and all of them have been met. The finance minister said that Pakistan, hopefully, will be able to be disbursed the first tranche whenever the board meeting of the IMF takes place, most probably in the later part of August 2022.

Ismail added that there were also some talks about the anti-corruption in the programme and stated that although it is not a prior action but he agreed to the Fund about forming a theme that would do a diagnostic analysis about anti-corruption law in Pakistan. He said that this would help to know about the use of these laws and whether there is any tradeoff between efficiency and anti-corruption laws.

The finance minister also stated that Pakistan today is buying very expensive LNG on spot rate because the previous government was unable to strike a long-term deal because of fear of anti-corruption or NAB laws which hugely cost the government.

He said that Pakistan would constitute a commission with the best experts around the world in consultation with the IMF and the people of the country to carry out a comprehensive review whether corruption has gone down or not during the last two decades after the NAB was set up.

Copyright Business Recorder, 2022