ISLAMABAD: Amid lenders’ pressure to wind up over $8 billion worth of Pakistan Sovereign Wealth Fund (PSWF), the government on Tuesday conceded the lack of clarity about its role, objectives and functions caused confusion over the chain of command of the country’s eight leading blue-chip public sector profitable entities.

The National Assembly’s Standing Committee on Finance and Revenue, presided over by PPP’s Syed Naveed Qamar, expressed serious concerns over the vagueness, lack of clarity and non-operationalization of the fund created about a year ago while copying the Saudi, Qatari and Emirati model.

Members of the committee pointed out that ministries had taken their hands off from these entities in matters of accountability saying these stood transferred to PSWF being operated by a forum directly under the prime minister but exercising powers in appointment of boards of directors.

Mr Qamar, who has served as federal minister for privatisation, finance, and energy and was also part of the cabinet that approved the PSWF Act 2023, said the act conflicted with privatisation and SOE laws, and it was still unclear what the government wanted to do with these companies. Another parliamentarian pointed out that the PSWF Act also attempted to bypass public procurement laws.

IMF and World Bank have already called for its abolition

Most of the members believed that companies were so crucial that they could not be left in limbo for long. Minister of State for Finance and Power Ali Pervez Malik and Special Secretary for Finance Nasheeta Mohsin conceded that there was a lot of confusion about whether or not to proceed with the PSWF, and the government was in the process of hiring an international consultant to move forward.

The IMF and the World Bank have strongly spoken against the sovereign fund and called for its abolition. Both have publicly questioned the lack of transparency in matters of corporate reporting standards relating to these entities.

Ms Mohsin told the panel that Oil & Gas Development Company Ltd (OGDCL), Govt Holdings Pvt Ltd (GHPL), Pakistan Petroleum Limited (PPL), National Bank of Pakistan (NBP) Mari Petroleum Co Ltd (MPCL), Pakistan Development Fund Ltd (PDFL) and Neelum-Jhelum Hydropower Ltd (NJHPL) were included in the Sovereign Wealth Fund.

She said a consultant would be hired in two weeks for advice on operationalization and devising the institutional framework of the Fund. She anticipated a clearer position regarding the PSW Fund’s continuity within the next four months.

Interestingly, the Ministry of Finance issued on Tuesday a notice seeking requests for proposals (RFPs) from 18 shortlisted consultants to guide a way forward through expert advice and provide consulting support. The deadline for submission of RFPs is set for August 31, indicating that the consultant may not be hired within two weeks as assured to the parliamentary panel.

Mr Qamar questioned the objectives of the creation of the Pakistan Sovereign Wealth Fund (PSWF). Minister of State for Finance Ali Malik responded that there were various provisions of the law enacted by the previous government that still remained unclear of which the government was cognizant and working on it.

PTI’s Omar Ayub Khan said the draft PSWF law along with the Special Investment Facilitation Council (SIFC) had come from Rawalpindi and nobody in the government nor in the parliament knew about its objectives and utility while the SIFC held ground, the PSWF could not even take off.

During the meeting, concerns were raised regarding the clarity of several provisions within the enacted law, which have contributed to delays in the operationalization of the Fund.

The Minister of State acknowledged that the lack of clarity was a significant barrier, preventing the Fund from fully operationalising into an institutional framework. Furthermore, entities transferred to the Fund are currently required to maintain their previous status quo, including their chain of command and reporting lines, he said.

Mr Qamar expressed concern over the disruption caused by the PSWF Act, observing that companies affected have ceased reporting through their established channels. On his advice, the minister of state committed to issuing clear written guidance to address these reporting issues and re-establish normal operations.

Published in Dawn, August 14th, 2024