Govt struggles to revive Sarmaya Pakistan

Majority board members of company have resigned since its inception

Zafar Bhutta May 03, 2020
Under a proposed plan, companies engaged in commercial operations were to be converted into companies having share capi-tal. PHOTO: FILE

ISLAMABAD: The government is struggling now to revive the Sarmaya-e-Pakistan Limited (SPL), a company set up by the Pakistan Tehreek-e-Insaf (PTI) government to turnaround loss-making firms which have become handicapped due to resignation of the majority of the board members since its inception.

In a bid to revive the company, the government has replaced Adviser to Prime Minister on Finance Dr Hafeez Shaikh with Prime Minister Imran Khan as chairman of Cabinet Committee on State-Owned Enterprises. The PTI government had set up SPL with a capital of Rs500 billion in a bid to take over management control and have better oversight of all public sector companies. But the company operations were stalled as majority of the board directors of the company resigned since its inception.

Sources told The Express Tribune that the resignations of six out of eight independent directors since inception of the company led to halting the recruitment process against key positions of SPL including the chief executive officer, chief financial officer and company secretary.

Sarmaya-e-Pakistan to fix the unfixable state-owned enterprises

The Finance Division had moved a summary on December 17, 2018 to the Federal Cabinet that approved the constitution of Cabinet Committee on State-Owned Enterprises (CCoSOEs). The CCoSOEs approved the nominations of eight independent members of the Board of Directors of SPL in its first meeting held on January 2, 2019. With the federal cabinet’s approval, the Finance Division incorporated SPL in February 2019 as a holding company to direct, supervise, oversee and coordinate the management of the subsidiary companies.

The SPL Board of Directors comprised eight independent and three ex-officio directors. SPL had remained non-functional since its inception mainly because of the resignations of independent directors thereby halting the recruitment process against key positions of SPL including chief executive officer, chief financial officer and company secretary. The Finance Division moved a summary for the CCoSOEs on December 7, 2019 to accept the resignations of six independent directors and approve the appointment of four new independent directors, who have furnished their consent to serve on the SPL Board.

However, due to preoccupation of the CCoSOEs chairman, prime minister of Pakistan, the meeting of the CCoSOEs could not be convened. Keeping in view the extremely busy schedule of Prime Minister Imran Khan, the Finance Division submitted a summary for approval that adviser to PM on finance may be designated as the CCoSOEs chairman. While agreeing to the proposal, the prime minister had been pleased to desire that the matter shall be placed before the federal cabinet, as noticed by the cabinet division.

The Finance Division sought approval of the cabinet to designate Shaikh as the CCoSOEs chairman, which was granted. In order to revive loss-making public sector enterprises, the government had decided to frame an appropriate governance structure keeping in view the best international practices followed in Singapore and Malaysia.

Sarmaya-e-Pakistan Limited likely to meet dead end

Under a proposed plan, the companies engaged in commercial operations were to be converted into companies having share capital and subsequently transferred to SPL.

Earlier, Adviser to the Prime Minister on Institutional Reforms and Austerity Dr Ishrat Husain had highlighted that recommendation for placement of certain entities in Sarmaya Pakistan had been made in light of an earlier cabinet decision. However, he also sought clarity on whether the concept of Sarmaya Pakistan was still in place or not.

Shaikh had informed the prime minister and cabinet members that due to legal complications associated with the concept of Sarmaya Pakistan, easier alternatives were being explored. The cabinet members also expressed concern over the fate of employees affected by the winding-up/mergers of various organisations. It was clarified that as per the earlier directions of the cabinet no employee would be laid off and instead would go into surplus pool for further adjustment in other organisations. 

Published in The Express Tribune, May 3rd, 2020.

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