Minister Pruaitch made this comment yesterday after the launch of the Asian Development Bank Pacific Private Sector Development Initiative (PSDI) report titled; Finding Balance 2016 Report on Performance of State-owned Enterprises in Pacific Island countries.
“The Government is borrowing so much to fund State-Owned Enterprises, and we need a policy on dividends payment,” he said.
Meanwhile, the report finding for years between 2010 and 2014, showed PNG’s SOE portfolio produced an average return on assets of 1.3 percent and an average return on equity of 2.4 percent, down from 4 percent and 7 percent respectively, between 2002 and 2009.
PNG Ports, PNG Power, and Air Niugini delivered a net profit of K510 million during this time, while Telikom PNG accumulated net losses of K129 million.
Christopher Russel, who is a SOE expert with the Asian Development Bank PSDI, said the SOE model is not sustainable because of political and commercial risks.
However, the privatisation of SOEs will help it perform. “Involvement of politicians undermines business interests and politicians struggle to make commercial decisions,” Russel stated.
“Private sector participation is needed for commercial gain.”
The State owning and controlling businesses can lead to nepotism in the appointment of board directors, said the SOE expert.
(File picture of Treasury Minister Patrick Pruaitch)