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Business Recorder
5 days ago
- Business
- Business Recorder
Privatisation of SOEs: PC to be given full legal autonomy: PM
ISLAMABAD: In a bid to accelerate the privatisation of loss-making state-owned enterprises (SOEs), Prime Minister Shahbaz Sharif pledged on Wednesday that the Privatization Commission would be granted full legal autonomy in an effort to eliminate bureaucratic red tape and extraneous interference in the country's privatisation process. The prime minister, while chairing a review meeting on progress of privatisation of SOEs, emphasised that reviving the country's ailing economy depends on the timely and transparent divestment of underperforming public sector entities. He described privatisation as a top priority for his administration, saying it must be handled 'effectively, comprehensively and efficiently.' SOE Act and MoF reporting: CCoSOEs grants SPD entities full exemptions 'Illegal occupation of valuable lands of national institutions is unacceptable under any circumstances,' he said, while urging caution in the disposal of such land. 'Every possible precaution should be taken.' The meeting focused on reviewing the progress of institutions slated for privatisation in 2024, including high-profile entities such as Pakistan International Airlines (PIA) and several power transmission companies, commonly referred to as Discos. PM Sharif directed that the Commission's efforts align with market conditions and adhere strictly to legal and transparency requirements. 'All decisions should be implemented fully and effectively,' he said. 'I will regularly monitor the progress of the ongoing work in the Privatization Commission.' The Privatization Commission officials briefed the prime minister on a phased strategy for privatising state enterprises, structured around legal, financial, and sector-specific factors. They noted that the plan, approved by the federal cabinet, is designed to meet both economic and institutional benchmarks within a fixed timeframe. The prime minister also underscored the importance of consulting professional experts and maintaining international standards throughout the privatisation and restructuring process. The push to privatise loss-making enterprises comes amid mounting fiscal pressures, with the government seeking to reduce its financial burden and attract private investment into sectors long plagued by inefficiencies and mismanagement. The meeting was attended by federal ministers Awais Leghari and Ahad Cheema, Chairman of the Privatization Commission Muhammad Ali, along with senior government officials and advisers. Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
Privatisation revenue projected at ‘zero' for current, next four years
ISLAMABAD: Privatisation revenue is projected at zero for the current year as well as for the next four years. This was revealed in the first staff level review report uploaded on the International Monetary Fund website this Saturday which further noted that privatisation proceeds had been zero since 2019-20. Nonetheless the IMF underscored the government's commitment to prioritizing the privatization of commercial State Owned Entities (SOEs). It noted that the focus will be on profitable commercial SOEs, supported by the completion of the SOE privatization classification. The objective is to reduce the government's commercial footprint and attract investments that can support Pakistan's long-term development. The report noted significant progress on several strategic transactions, particularly the privatization of Pakistan International Airlines (PIA). It stated that key investor concerns have been addressed, including the resolution of negative equity, settlement of longstanding tax liabilities, and the lifting of the European Union's ban on PIA operations. The report noted that these steps, combined with an ongoing investor outreach program and completed due diligence, have laid the groundwork for a successful transaction by August 2025. It further reported that the privatization of First Women's Bank Limited (FWBL) and the House Building Finance Corporation (HBFC) is on track for completion by May 2025; and that buyer selection has been finalized and transaction documents are under review. The report stated that the process for Zarai Taraqiati Bank Limited (ZTBL) has also begun, with asset profiling underway and the launch of the transaction targeted for the fourth quarter of 2025. A financial advisor has been appointed to support the process. The report emphasized that the privatization of distribution companies (DISCOs) and generation companies (GENCOs) is central to restoring the financial viability of the energy sector. It noted that for Batch I DISCOs (IESCO, FESCO, GEPCO), sell-side due diligence is underway, and bidding is scheduled for December 2025. It stated that advisory services for Batch II DISCOs (HESCO, SEPCO, PESCO) were initiated in April 2025. It further highlighted that bidding for Nandipur GENCO is targeted for January 2026. The report noted that progress is also being made on finalizing the transaction structure for the Roosevelt Hotel. It stated that efforts are ongoing to identify, cost, and formalize Public Service Obligations (PSOs) for the seven SOEs with the largest fiscal claims. The process remains on track to be completed by June 2025, in line with Schedule II of the SOE Act and the SOE Policy. The report highlighted that this step is essential for improving fiscal transparency and ensuring that PSOs are delivered efficiently under properly costed and contracted frameworks. The report urged that all divestments and procurement activities under the Sovereign Wealth Fund must adhere to international best practices. It emphasized that procedures should be open, competitive, transparent, and non-discriminatory, with clear disclosure requirements and full transparency of beneficial ownership. It noted that while SWF rules will be institutionally independent of general government regulations, they will generally align with national standards to ensure policy coherence. The report confirmed that structural benchmarks are being met and all policy actions necessary to prepare two DISCOs for privatization were completed by end-January 2025. It further noted that financial reporting and transparency requirements continue to be observed, including quarterly reporting of privatization proceeds and bi-annual reporting of privatization progress. Copyright Business Recorder, 2025
Business Recorder
23-04-2025
- Business
- Business Recorder
No deviation from framework: SOEs can frame own procurement rules: PPRA Board
ISLAMABAD: The Public Procurement Regulatory Authority (PPRA) Board has affirmed that State-Owned Entities (SOEs) are autonomous in formulating their own procurement rules and their policies can only be questioned in cases of deviation from the overarching PPRA framework, well-informed sources told Business Recorder. According to sources, during a recent meeting of the PPRA Board, the Managing Director (MD) of PPRA presented the agenda and briefed the Board that, in line with Section 17(2) of the SOEs Act, 2023, various SOEs had submitted independent procurement policies for review, requesting feedback. The matter was brought before the PPRA Board during its 92nd meeting on February 20, 2025. The Board decided to seek legal guidance from the Ministry of Law and Justice to determine whether Section 17(2) of the SOEs Act, 2023, holds precedence over the PPRA Ordinance, 2002, which is a specialized law on public procurement. ATIR Islamabad orders transfer of tax appeals involving SOEs to ADRC Following the Board's decision, PPRA referred the matter to the Ministry of Law and Justice on March 11, 2025. In its response, dated March 21, 2025, the Ministry clarified that SOEs are authorized to create their own procurement policies, subject to the approval of the Federal Government. Furthermore, SOEs are only required to adhere to the PPRA Ordinance, 2002, to the extent specified by the Federal Government—effectively limiting the Ordinance's applicability in such cases. The Ministry further elaborated that while the PPRA Ordinance, 2002, governs public procurement as a special law, the SOEs Act, 2023, is also a special law but specifically tailored to SOEs. According to established legal principles upheld by the Supreme Court in 2017 SCMR 1218, when two special laws conflict, the later-enacted statute prevails. Therefore, Section 17(2) of the SOEs Act, 2023, overrides the PPRA Ordinance, 2002. In light of this clarification, the MD of PPRA stated that while SOEs are permitted to maintain independent procurement policies, the PPRA—as a regulatory authority—should still monitor these policies to ensure compliance with their respective frameworks. He proposed that before reviewing such policies, the PPRA should require SOEs to clearly indicate which provisions of the PPRA framework they will follow, and where they intend to introduce deviations or new clauses, accompanied by appropriate justification. The MD suggested that the PPRA review SOE procurement policies based on the following parameters: (i) compliance with Core Principles; (ii) extent of deviation; (iii) new policy provisions; (iv) official declaration as SOE; (v) scope of procurement policy; (vi) maintenance and regulatory mechanism; (vii) third-party evaluation and grievance redressal; and) (viii) CIPS certification. According to sources, one of the Board members opined that since the Ministry of Law and Justice has rendered its interpretation after examining the legal provisions of SOE Act and PPRA Ordinance that an SOE may develop its own procurement policies with approval of the Federal government, PPRA only need to point out the deviations from PPRA framework and offer comments where necessary. Moreover, there is no justification for PPRA to act as regulator of such SOEs whose procurements are not made in conformity with PPRA framework. Copyright Business Recorder, 2025
Express Tribune
27-02-2025
- Business
- Express Tribune
PRAL board starts amid violations
Listen to article The board of Pakistan Revenue Automation Limited (PRAL) – a key player in the government's Rs3.7 billion plan to modernise the information technology arm of the tax machinery – has started its work without first disclosing potential conflicts of interest or developing a code of conduct, a requirement under the law. The non-disclosure of conflicts of interest violates the State-Owned Enterprises (SOE) Act and the SOE policy – two legal frameworks developed with international financial institutions' assistance to improve governance in state-run entities. Sources revealed that the board has been holding meetings without first ensuring that newly appointed members have no direct or indirect conflicts of interest while making key policy decisions. The board is also responsible for overseeing the Rs3.7 billion PRAL restructuring plan. PRAL serves as the technology arm of the Federal Board of Revenue (FBR). The decision to proceed with meetings without first obtaining conflict of interest declarations from newly appointed members directly violates the SOE Act, SOE Policy, and the Companies Act 2017. The Express Tribune sent queries to PRAL Board Chairman Arif Saeed, FBR spokesperson Dr Najeeb Memon, and PRAL management regarding these violations. Only PRAL management responded, while the chairman and FBR spokesperson remained silent even after four days. "The management of the company is fully cognisant and strives to be compliant with all applicable legal requirements and obligations," PRAL stated in a written response. This suggests the board is operating in violation of the SOE law, which could result in penalties under the Companies Act. Sources said that after receiving the Express Tribune's questions, the PRAL board began drafting a conflict of interest policy. Under SOE policy, all directors and managers must sign a declaration upon appointment. This declaration confirms they have received and understood the policy on conflicts of interest. It also states they will not accept payments, bribes, favours, or inducements that could influence their decisions. Failure to comply could lead to their removal. The government recently appointed the PRAL board, which Finance Minister Muhammad Aurangzeb and FBR Chairman Rashid Langrial have praised as highly talented. The board is chaired by Arif Saeed, with independent directors including Salman Akhtar, Dr Muhammad Fareed Zafar, Ehsan Saya, and Nazish Afraz. The Express Tribune asked the chairman about the SOE policy's requirement for directors and managers to declare conflicts of interest. He was also asked about Section 34 of the SOE Policy, which mandates a code of conduct for PRAL board members. Additionally, the chairman was asked about Section 13 of the SOE Act, which defines the term of office for directors. Section 13(2)(f) states that a director can be removed for failing to comply with the SOE's code of conduct and conflict of interest requirements. No response was provided. Meanwhile, PRAL has decided to hire 50 data experts through a third party. Sources raised concerns that this could compromise data protection and privacy. A third party may not ensure the security of sensitive information. The Express Tribune also asked the board chairman if third-party hiring could put taxpayer data at risk. External firms may not be trusted with highly confidential information. Additionally, the chairman was asked whether board members were involved in the hiring process, which falls outside their policy-making role. He did not respond. In its most recent meeting, the PRAL board approved several measures. These include creating an operational unit for FBR's requirements, forming a dedicated data wing for analytics and governance, and assigning experts to validate Change Request Forms (CRFs). The board also created an Apex Committee for project approvals and structured software development teams based on project scope. A Data Governance Policy was implemented, and recruitment for a Chief Information Security Officer (CISO) and Chief Data Officer (CDO) began. The board also formed a committee within the FBR to streamline project prioritisation. Sources said board member Salman Akhtar suggested hiring third-party firms for technical expertise. PRAL has already invited bids for third-party hiring, with a submission deadline of March 4. In December, the federal cabinet approved a Rs3.7 billion supplementary grant for PRAL restructuring. Official documents show the estimated recurring cost for the next fiscal year is Rs4.5 billion. Government documents highlight that PRAL's restructuring is critical to improving the tax-to-GDP ratio. The board has a key role in this effort. According to the cabinet's decision, PRAL will receive a one-line budget, with its board approving the annual budget based on government grants and its own revenue. The restructuring has significant financial implications. The government will provide Rs3.7 billion for the current year, while recurring costs will reach Rs4.5 billion from 2025-26 onwards. Among the major components of the PRAL restructuring are enhancing software development and maintenance capabilities through three modes: in-house development, in-house maintenance only, and outsourcing development to third parties. The plan also includes upgrading hardware and data centres, replacing end-of-life equipment, and establishing an analytics hub.
