By Abdul Wajid Khan ISLAMABAD, June 13 (INP-WealthPK): The National Assembly has passed a bill moved by the Ministry of Finance to improve governance, operations and financial efficiency of the state-owned enterprises (SOEs). According to the bill titled “The State-Owned Enterprises (Governance and Operations) Bill 2021”, the governance and operations of these enterprises affect the quality of service-delivery as well as the fiscal discipline of the state, which makes it necessary to establish requirements about the governance and accountability of the SOEs. The purpose of this bill is to define the role of the federal government as a shareholder with a view to enabling an effective discharge of its obligations, introduce transparency in operations and establish a central database of information pertaining to the SOEs to support data-driven policymaking by the federal government. Under this bill, the federal government shall establish a central monitoring unit in the Finance Division which shall also maintain an electronic database of the financial and operational performance of the SOEs and the following information in relation to SOEs, namely: statements of corporate intent; business plans; half-yearly and annual reports; and any other information prescribed in the SOEs Management Policy. The central monitoring unit shall undertake analysis on the financial, commercial and operational performance of the SOEs, and on the basis of such analysis, submit recommendations to the federal government. The monitoring unit shall issue periodic reports on the performance of the SOEs. It shall also publish a consolidated report on the performance of SOEs annually with the approval of the federal government. Every SOE shall undertake its operations in accordance with the criteria for sound and prudent management. According to a brief of the ministry on the bill, there are over 200 SOEs which are under the administrative control of around 20 ministries/divisions. It said that currently these SOEs are operating in various sectors including 85 commercial SOEs, 44 non-commercial SOEs and 83 subsidiaries of the commercial SOEs. These SOEs have significant presence particularly in the banking, insurance, power, energy, railways and aviation sectors. Majority of these SOEs were established under Companies Ordinance 1984, whereas a few SOEs such as Pakistan Railways and Pakistan Post were established through special enactments. The current governance structure is decentralised whereby the SOEs are managed by various ministries/divisions without any central coordination and supervision framework. The bill also aims at improving and integrating the legal framework of SOEs governance through clearly defining the roles of the government as an informed shareholder, line ministries and the boards of SOEs. The bill lays down principles of good governance such as performance measurement, monitoring and reporting. It covers SOEs registered under Companies Act 2017 or established through special enactment with the stipulation that there is no conflict in this bill with special enactments of the SOEs and regulatory requirements. It provides a structured mechanism to appoint suitable candidates to Board of Directors (BoD) and clarifies the jurisdiction of the BoD and line ministries/divisions. It requires the federal government to develop and periodically review the SOEs ownership and management policy for giving effect to the objectives of this bill. Despite their important role in providing essential public goods and services, the financial performance of several SOEs has remained unsatisfactory. Pakistan’s noted businessman Mian Muhammad Mansha in an interview advised the government to privatise the SOEs that are costing taxpayers up to $3.5 billion a year. He said that loss-making SOEs are a source of distortions in the market, and the economy and government should fix these distortions by privatising them because this will not only bring economic dividends for the government, but also improve the quality of services. He said privatisation will enhance growth, boost taxes, encourage market competition, attract foreign direct investment and promote growth.