ISLAMABAD: The government has initiated some concrete measures to improve the performance of Public Sector Enterprises (PSEs). The Cabinet Committee on Restructuring (CCOR) has identified Pakistan International Airlines (PIA); Pakistan Steel Mills (PSM); Pakistan Railways (PR) and the Utility Stores Corporation (USC), among others, as bodies that need improvement in corporate governance, service delivery, and reduction of fiscal burden and savings.
A framework for hiring professional CEOs has been approved by the CCOR and the Board of Directors (BoDs) of different PSEs are being empowered to induct professionals from the market through a transparent process; consequently, financial haemorrhaging has been curtailed in these PSEs.
A new BoD of PR has been constituted with an optimal mix of academia, management professionals, rail experts and executive functionaries, which will become functional after an amendment to the Railway Order. Repair of locomotives and freight operations have been prioritised for improving revenue generation and restoration of rail services. It has been decided that adjustment of fares and freight pricing will be determined according to market conditions and cost of doing business.
Pakistan International Airlines
An overarching restructuring plan for PIA has been finalised which addresses corporate governance, human resource rationalisation, financial and operational restructuring, engineering improvement, procurement and logistics, marketing and fleet, airport services and dispatch reliability, among others. Increased fuel cost has been a major downside risk to the financial strength of PIA, and effective measures have been put in place to mitigate the effect. Fleet renewal and addition is being planned. Route rationalisation, code sharing and alliances are being pursued for moving to a new business model. Rationalisation of employment in PIA is being addressed through attrition, and no new hiring is being undertaken except for operational staff. A financial restructuring plan has been finalised, which includes an equity injection, rollover of loans, and government guaranteed loans among others.
Pakistan Steel Mills
The BoD of PSM has been reconstituted. Process for selection of a professional CEO of PSM has been finalised. Smooth availability of raw materials to PSM has been ensured. A strategic view needs to be undertaken for sustainable revitalisation of PSM, which may entail collaboration and partnership with the Russian government, privatisation, private-public partnership and operations and management outsourcing
Future strategy will be focused on developing a framework for ensuring well-functioning Boards and engaging them in the turnaround of PSEs. The corporate governance framework envisages: a transparent process of Board nominations; capacity building of BoDs; clarifying the role of BoDs; monitoring performance of BoDs by setting key performance indicators; and preparations for the privatisation of the Faisalabad Electric Supply Company and the Islamabad Electric Supply Company.
The writer is a director in the Ministry of Finance.
Published in The Express Tribune, May 14th, 2012.