ISLAMABAD, April 12: The two main regulations of the Securities and Exchange Commission of Pakistan (SECP) related to developing corporate governance are not applicable on most of public sector enterprises (PSEs).

Meanwhile, a large number of PSEs have legal protection, enabling their line ministries to supersede the Companies Ordinance and the Code of Corporate Governance for listed companies.

The speakers at second round table on Corporate Governance Regulation for the public Sector Enterprises on Thursday stressed for imparting corporate governance in the PSEs.

The draft regulations for the PSEs have been formulated by the SECP, with the view to improve efficiency of the government-owned enterprises and reducing the burden on national exchequer incurred annually to maintain these commercial entities in operating conditions.

Finance Minister Dr Hafeez Shaikh said that the difficult task was to bring all the SOEs under similar legal ambit.

“It is a complicated matter as many entities are companies but have legal protection against complete implementation of the Companies Ordinance, some are companies but the role of line ministry is too strong in their affairs whereas some like Railways and the NHA do not even have any company status, altering the legal structure of these PSEs is a serious task,” he said. It was noted in the roundtable that the line ministries were resisting the change.

Shaikh, who is also the chairman Cabinet Committee on Restructuring of PSEs, said that the ministries were still involved in short listing and appointments of the MDs and the CEOs of these PSEs.

“The general trend is that someone who is a secretary of any social sector ministry would be operating a production unit second day without any relevant background. The new regulation on PSE would be the first step in breaking the grounds.

He said that the PSEs have a structural problem, making them uncompetitive in an open market scenario. “As a result, the government has to inject finances to reduce losses.”