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Ministry says unable to implement SOE restructuring plan

ISLAMABAD: Ministry of Industries and Production (MoI&P) has reportedly expressed inability to implement...
Updated 24 Oct 2020

ISLAMABAD: Ministry of Industries and Production (MoI&P) has reportedly expressed inability to implement restructuring plan of State-Owned Entities (SOEs), saying that Institutional Reforms Cell (IRC) had not fully thought through the reorganization as per its ToRs, well informed sources told Business Recorder.

Sharing details, sources said on October 13, 2020, MoI&P apprised the Federal Cabinet that its following decisions of December 23, 2019 could not be implemented: liquidation of Aik Hunar Aik Nagar, (AHAN), transfer of Pakistan Machine Tool Factory (PMTF) to Strategic Plans Division (SPD), transfer of ENAR Petrotech Services Private Limited (EPSL) to Oil and Gas Development Company Limited (OGDCL), (Petroleum Division); transfer of NFC Institute of Engineering and Technology, Multan and NFC Institute of Engineering and Fertilizer Research, Faisalabad to Federal Education and Professional Training Division and merging National Fertilizer Marketing Limited (NFML) with Trading Corporation of Pakistan (TCP).

The Federal Cabinet had further directed that Karachi Tools, Dies and Moulds Centre (KTDMC), Furniture Pakistan (FP), National Industrial Parks Development and Management Company (NIPD&MC), Technology Up-Gradation and Skill Development Company (TUSDEC) and Industry Facilitation Centre (IFC) may be merged with Pakistan Industrial Development Corporation (PIDC). Additionally, Gujranwala Business Centre (GBC) had to be merged with PIDC, subject to concurrence of Gujranwala Chamber of Commerce and Industries. Furthermore, Cabinet Division, on April 14, 2020, conveyed the decision of Federal Cabinet to declare several SOEs as Autonomous Bodies, under administrative control of various Divisions, including, Industries and Production Division. Besides, Cabinet Division, on 7 May 2020, communicated that four more SOEs, under administrative control of Industries and Production Division, were to be placed on active privatization list and eleven others were declared candidates for privatization / Sarmaya-e-Pakistan by the Federal Cabinet.

The sources said owing to the decisions of the Federal Cabinet and subsequent restructuring process of the SOEs, there was an impending need for having respective heads of organizations to ensure efficient implementation of the decisions. However, it was impractical for MoI&P to appoint regular Chief Executive Officers (CEOs) / Managing Directors (MDs) of under-transition SOEs from the private sector through advertisements in line with the Schedule-I of Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015 and Cabinet Division's O.M.of July 29, 2019. This impracticality was further compounded by lack of willingness on part of the eligible private sector candidates, given the wavering fate of the concerned organizations. Besides, the Division had a fiduciary responsibility to ensure a transparent transfer / merger / liquidation / privatization of such organizations, as the case may be, that fall under its ambit. The responsibility extended to the assets and liabilities of these SOEs, under Rule 5(9)(e), read with Schedule II section 15 of Rules of Business 1973. In the absence of heads of under-transition SOEs, the Ministry may not be able to supervise and /or fix responsibility, in case of any lapse, during the transition period. A summary, in this regard, was submitted to the Prime Minister, as Minister In-charge, through Establishment Division, on March 17, 2020. In light of the comments and observations of Establishment Division and Adviser to the Prime Minister on Institutional Reforms and Austerity and subsequent decisions of the Cabinet, a revised summary had been drafted for consideration of the Cabinet.

The Industries and Production Division sought the approval of the Cabinet for SOEs falling in category-A i.e. which were to be retained as autonomous bodies, additional charge of the vacant posts of CEOs / MDs may be assigned, till the appointment of regular CEOs / MDs. Further, the Division also proposed that for the organizations falling in Category-B, which were to be merged / transferred / liquidated / privatized, the additional charge for the posts of CEOs / MDs may be assigned, as proposed, till the process of re-structuring was completed, as per the decisions of the Cabinet. These appointments were proposed to fill casual vacancies, under section 187(1), read with 187(4) of the Companies Act 2017, Rule 5(2) of Public Sector Companies (Corporate Governance) Rules, 2013 to ensure implementation of decisions of the Cabinet, without hampering the day-to-day affairs of the concerned SOEs. During the discussion, Secretary Industries & Production highlighted the practical difficulties in implementing the recommendations of Institutional Reforms Cell, duly approved by the Cabinet, in respect to mergers and transfer of various organizations. It was highlighted that the Institutional Reforms Cell had not fully thought through the reorganization as per its ToRs, which, therefore, was causing difficulties in implementation.

As per the ToRs approved by the Cabinet, the Implementation Committee was required to work out an implementation strategy/work-plan by taking into consideration the following aspects: (i) cost benefit analysis to the entities concerned; (ii) expected outcome of the proposed transformation with reference to service delivery; (iii) constitutional and legal ramifications/consideration; and (iv) issues pertaining to terms and conditions of Civil Servants and impact of the re-organization exercise on career progression of existing Civil Servants. It was proposed that the implementation status on institutional reforms be presented before the Cabinet. The Adviser to the Prime Minister on Institutional Reforms and Austerity stated that out of the reorganization of 441 entities, only 7 were encountering implementation problems, which was a small percentage. He advised Industries & Production Division to bring the issue to CCIR for resolution. The Secretary Cabinet Division informed the forum that necessary notifications for reorganization of 333 entities had been issued after the approval of the Cabinet. It was further noted that in the interest of clarity, an amendment in the Rules of Business will be made once the entire exercise is complete.

The Cabinet further directed Adviser to the Prime Minister on Institutional Reforms and Austerity to present implementation status of the restructuring and reorganization, already approved by the Cabinet, in the Cabinet meeting scheduled to be held on November 3, 2020.

Copyright Business Recorder, 2020