The ministry clashed with the privatization of SOEs

The ministry clashed with the privatization of SOEs

The fate of 40 state-owned enterprises (SOEs) that are considered strategic and important by their respective ministries but not accepted as such by Deputy Prime Minister Ishaq Dar has yet to be decided after Finance Minister Muhammad Aurangzeb chaired a cabinet committee meeting on Monday.

The Cabinet Committee on State-Owned Enterprises (CCoSOEs) refrained from confirming the classification of these 40 enterprises as strategic assets of Pakistan, hence ineligible for privatization. The Ministry of Finance informed the committee that the ministry did not provide details on companies they considered strategic and important.

Last Friday, the Cabinet Committee on Privatization (CCOP), chaired by Dar, directed the CCoSOEs to re-evaluate the proposed categorization of these 40 entities. Despite the Ministry of Finance’s stance, the ministry has already announced a list of their assets that are considered strategic and important.

The committee, chaired by Aurangzeb, convened to address the CCOP directive but refrained from making a decision.

Departing from past practice, the CCoSOE and CCOP chairmanships now rest with different federal ministers. Dar headed the CCOP, while Aurangzeb headed the CCoSOE. Last week, the board of the Privatization Commission proposed the listing of 24 entities for active privatization and recommended that the CCOSOE can decide on the categorization of the other 40 whether these are strategic and important.

However, Dar argues that most of these 40 entities do not meet the criteria to be considered strategic.

Prime Minister Shehbaz Sharif has promised to reduce the government’s footprint through aggressive privatization. However, the Ministry of Privatization submitted only 21 entities for active privatization out of 85 commercial entities. According to the SOE Management Policy 2023, CCoSOE has the power to declare any strategic firm based on the advice of the ministry. However, the CCOP has the ultimate mandate to recommend entities for privatization.

The Ministry of Finance informed CCoSOE that the ministry does not provide a list of entities that are considered strategic and important. CCSOE was further informed that the government ministry must make a decision by May 27, according to SOE policy. Based on information from the finance ministry, CCoSOE set a deadline of May 20 for ministries to share information about their strategic assets.

It appears that the finance ministry did not provide complete information to the committee, as the proposed list of strategic entities was shared with another cabinet committee—the CCOP. An official from the finance ministry stated that commercial entities can only be designated as strategic or non-strategic based on a board resolution.

A list compiled by the Ministry of Privatization, based on information from the ministry, revealed that the Cabinet Division identified two SOEs—Pakistan Tourism and Development Corporation and Pakistan Printing Corporation—as strategic and important assets.

The Commerce Division labeled five companies as strategic, including Pakistan Reinsurance Company Limited, National Insurance Company Limited, State Life Insurance Corporation, Trading Corporation of Pakistan, and Pak Expo Centre.

After the CCOP meeting, the foreign minister and deputy prime minister stated that the insurance sector should not be considered strategic. The Defense Production Division classifies the Karachi Shipyard and Engineering Works as strategic and important.

The finance ministry also designated five companies as strategic, including SME Bank, Exim Bank of Pakistan, National Security Printing Company Private Limited, National Bank of Pakistan, and Industrial Development Bank Limited.

Similarly, the Ministry of Housing and Public Works categorized National Construction Limited and Environmental Planning and Architectural Consultants of Pakistan as strategic. The Ministry of Industry stated that the Export Processing Zone Authority and the Small and Medium Enterprise Development Authority are strategic firms.

The Ministry of Information identified the Pakistan Broadcasting Corporation and Pakistan Television as strategic and important organizations.

The Ministry of Information Technology describes the National Telecommunication Corporation as a strategic organization.

The Ministry of Maritime Affairs proposed four organizations as strategic—Karachi Port Trust, Port Qasim Authority, Gwadar Port Authority and Pakistan National Shipping Corporation.

The food ministry labeled the Pakistan Agricultural Storage and Services Corporation (PASSCO) as strategic.

Pakistan’s Ministry of Foreign Affairs declared the Overseas Employment Foundation as a strategic entity.

The Petroleum Division categorizes Pakistan State Oil and Pakistan Mineral Development Company as strategic.

The Power Division identified seven entities as strategic, including the Generation Holding Company, National Transmission and Transmission Company, Taman Tenaga Nasional Berhad Management Company, Central Power Purchase Agency Guarantee Limited, National Engineering Service of Pakistan and Private Power Infrastructure Board.

According to the Finance Ministry’s 2022 report, these entities collectively incurred a loss of Rs734 billion. CCoSOE is informed that the 2022-23 report is in the final stages of preparation.

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