ISLAMABAD: The Ministry of Finance has started the process for hiring of Central Monitoring Unit (CMU), which will be responsible for preparing the SOEs performance reports based on the analysis of data to support the government in adopting data-driven strategies for their management.
Sources said that the Ministry of Finance has submitted a brief to the Senate Standing Committee on Finance for approval of the proposed SOEs law with the contention that the CMU being envisage would also be responsible for establishing an electronic database for financial and non-financial reporting by the SOEs and subsequently, generating data analysis of their performance to support the Cabinet in adopting data-driven strategies for SOE management.
Giving background, the ministry said that in their July 2019 report for Pakistan, the precursor for the $6 billion Extended Fund Facility (EFF). the International Monetary Fund (IMF) highlighted the need to reform SOEs as a key reform priority and the following activities were identified as near-term reform priorities;(1) initiating the privatisation of selected SOE;(2) increasing SOE transparency through new audits;(3) triage of SOEs;(4) and enhancing the self-legal framework through a new SOEs Law.
A process of consultation was initiated with all line ministries in this regard in 2019-20 and the SOE triage was developed with support from World Bank and Devilment Bank (ADB) and approved by the Federal Cabinet. The audit of SOEs was also carried out and the findings were shared with the IMF and the privatization of elected SOEs also commenced.
The ADB was requested for technical assistance to: (i) help draft an SOE law;(ii) develop a SOE Policy, and (iii) help establish and operationalise a CMU within the MoF to monitor and report on the financial and non-financial performance of Pakistan’s SOEs, thereby strengthening transparency and accountability.
A committee comprising officials from the Finance Ministry, the Securities and Exchange (SECP), the Privatization Commission, and key professionals from the private sector formed in March 2020 to provide overall guidance and structure for the SOE law.
The Ministry of Finance and technical experts contracted by the ADB developed the first draft of SOE law which was submitted to the Parliament by the cabinet. The proposed SOEs bill was discussed in detail by the Standing Committee on Finance of the National Assembly. and their input has also been duly incorporated.
The meeting was further informed that at present the proposed law is awaiting approval of the Senate after its approval by the National Assembly on 06-06-2022.
The Ministry also developed the first draft of an SOE ownership and management policy which has been shared with the line ministries. The establishment of the CMU was approved by the then Prime Minister in 2020 and the process to hire the staff is well underway.
One of the IMF benchmarks is related to incorporating good corporate governance principles into the established statutes of SOEs which are registered under the Companies Act 2017. This would require drafting amendments to these statues/acts.
A criterion was developed to select at least four of these SOEs and the list of the candidates has been approved by the finance minister. The MoF intends to accomplish the first phase of reforms with the approval of SOE law by the Parliament, approval of SOE Policy by the Federal Cabinet and establishment and operationalisation of a CMU which will then be responsible for preparing SOE performance reports the establishing an electronic database for financial and non-financial reporting by the SOEs and generating data analysis of SOE performance to support the Cabinet in adopting data-driven strategies for SOE management.
Corporate governance amendments in statutes of four SOEs which are not established under Companies Act 2017 and 5 A consultation workshop in late July 2022 to brief stakeholders on SOE reform progress to date and gather feedback The seminar was held on 27-07-2022. Once the report of the seminar is finalized, it will be shared with all stakeholders.
Copyright Business Recorder, 2022