The federal government has established Sarmaya-e-Pakistan, a holding company to turn around state-owned enterprises by eliminating their losses.
The Securities and Exchange Commission of Pakistan (SECP) issued a certificate of incorporation to Sarmaya-e-Pakistan under the Companies Act 2017, according to an official notification.
“Turning around state-owned enterprises and eliminating their losses that are eating up resources which should be used for development and welfare is vital for the economic turnaround of Pakistan,” said Finance Minister Asad Umar in a tweet on Friday.
The finance secretary is the chief executive and director of Sarmaya-e-Pakistan while the other two directors are Azhar Ali Chadhry and Fazal Abbas Maiken. The total paid up capital is Rs100,000 while it is 100% government-owned, said sources in the finance ministry.
It will gradually take over the management control of loss-making entities and will have better oversight of all public sector companies, including PIA and the Pakistan Steel Mills.
The performance of public sector companies has deteriorated over the years mainly because of lack of administrative and technical skills and political interference. The government wants to place them under the control of successful business executives from the private sector.
The International Monetary Fund (IMF) has been consistently demanding the Pakistan government control the billions of rupees in losses it incurs through its public sector companies.
The total net profit of these companies stood at Rs193 billion in 2014 and Rs52 billion in 2015. In 2016, the national exchequer faced a net loss of Rs44.77 billion, according to the SOEs Annual Report 2015-16.
In 2017-18 the cumulative losses of these state-owned enterprises — including PIA and the steel mills as wells as electricity and gas companies — crossed Rs1.1 trillion.