SOEs expected to make money

By MALUM NALU
THE government, like any shareholder, expects a commercial rate of return on its investments, according to Treasury deputy secretary (economic and financial policy) Anthony Yauieb.
Speaking at the launch of Asian Development Bank’s Finding Balance: Benchmarking the Performance of State-Owned Enterprises report released last Thursday, Yauieb said it was critical that the government clearly communicated its expectations of, and clarified the policy settings for, public enterprises and its commercial investments.
“A key aspect of the policy settings involves communicating that the government expects SOEs to operate as commercial and professionally-managed businesses,” he said.
“Consistent with this primary objective, they should be as profitable as a comparable business not owned by the state.
“The government will reflect this desire that public enterprises operate with a commercial focus via the finalisation of dividend, community service obligation (CSO), public-private partnership (PPP) and the on -lending policies in 2012.
“We successfully completed the PPP policy in 2008 while the on-lending policy has been finalised in 2011.
“We are now focusing on finalising the dividend and CSO policies in close consultation with Independent Public Business Corporation (IPBC).
“The draft PPP law has been finalised and will be submitted to parliament during the budget session.”
Yauieb said over the past 12 months, the government had made substantial progress in increasing the transparency with which the SOEs and IPBC were managed.
“As ADB’s Finding Balance study has found, PNG has gone from having one of the least-transparent SOE governance and accountability frameworks in the Pacific to one which is increasingly robust, with the preparation of annual plans and publication of IPBC accounts,” he said.
“We look forward to seeing a continued increase in transparency and accountability.”
Yauieb said while PNG still had much more work to do in order to place its SOEs on a fully commercial footing, Treasury was pleased to see that IPBC’s business plan for 2012 reflected the same priority actions:
•    Ensuring compliance with the planning and reporting requirements contained in the IPBC Act;
•    Establishing stronger links with the Independent Competition and Consumer Commission (ICCC) in the defining and enforcing service standards and financial performance outcomes for relevant SOEs;
•    Publicly reporting on service standard outcomes and financial performance of SOEs;
•    Reviewing and reporting on opportunities for greater private sector involvement through mechanisms such as independent power producers (IPPs), PPPs and possible divestment of shares in public enterprises; and
•    In consultation with Treasury, contribute to the finalisation of the CSO and dividend policies for government consideration.”