April 06, 2007	Friday	Rabi-ul-Awwal 17, 1428

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LAHORE, April 5: As part of its governance reforms agenda, the Punjab government proposes to order internal audit and self-evaluation of public-sector organisations (PSOs) to make an assessment of their performance to decide their future once and for all.

The provincial finance department has already moved a summary to seek approval of the chief minister for the exercise aimed at closing and liquidating the inefficient PSOs and/or reforming the better ones.

“The purpose of undertaking the entire reform exercise is to weed out the inefficient and loss-making PSOs through liquidation or privatising and restructuring them to make them efficient and self-sustaining in order to plug financial bleeding,” a finance department official told Dawn on Thursday.

“We have three options — either close down the inefficient and loss-making PSOs, or restructure them, or privatise them. The future of each entity will be decided in accordance with the final internal performance assessment of its managerial and technical capacity and its efficiency and productivity,” the official said.

The concept paper for undertaking the entire PSO reform exercise has been prepared by the Punjab Resource Management Programme which was launched in 2003 with the financial assistance of the Asian Development Bank.

The ADB has extended a soft five-year credit facility of $500 million to the Punjab government for undertaking governance reforms in the province. The loan is being used by the provincial government to retire its expensive federal debt and create a fiscal space for development. The strategy has already created fiscal space of Rs24 billion over last three years for development.

According to the official, once the chief minister approves the policy of reforming PSOs it will be placed before the cabinet for its consideration and decision to put them under review in a phased manner. The self-evaluation report by each PSO will then be placed before a sub-committee of the provincial cabinet comprising ministers of finance, planning & development, industries, and labour departments.

The minister of the department (PSO) concerned will also be sitting on the sub-committee that will be assisted by technical experts from the fields of accountancy, business management, finance, change management, etc., for their input on the review reports.

“The cabinet sub-committee will be a formal arrangement to scrutinise the internal audit reports of the PSOs and make recommendations for their liquidation, restructuring and privatisation on the basis of their performance review reports,” the official said.

The exercise on PSO reforms, the official said, was likely to commence from the middle of this month with the issuance of letters by the provincial cabinet to all entities for carrying out self-evaluation. The PSOs will be required to complete their internal audit and submit reports with recommendations about the future course of action by end of June this year.

The reports of PSOs will be scrutinised by the cabinet sub-committee in a phased manner for making final recommendations on their future over a period of two years starting from Jan 1 next year.

“In two years all PSOs in the province will either be closed down, or restructured, or privatised,” the official said. He said the cabinet was expected to take up the cases of five PSOs — the Government Printing Press, the Punjab Small Industries Corporation, the Punjab Seed Corporation, the Punjab Provincial Cooperative Bank Ltd, and the Tourism Development Corporation of Punjab — as studies on their performance had already been completed by the consultants.