THREE Ministries with a total of six State-Owned Enterprises (SOEs) under their portfolios and a statutory institution have expressed reservations about the proposed consolidation of ownership monitoring responsibility for SOEs, including the sole power to evaluate the performance of directors of SOEs and the election of Board Chairpersons and their Deputies, in the Minister of Finance and Treasury (MoFT) alone.
These are part of the proposals contained in the SOE (Amendment) Bill 2024, which the Parliamentary Bills and Legislation Committee concluded its hearing into last week.
The SOE (Amendment) Bill 2024 was drafted in accordance to Solomon Islands Government’s endorsement of the SOE Ownership Policy 2018 and the National Gender Equality and Women’s Development Policy 2018-2020 to:
- Consolidate ownership monitoring responsibility for SOEs in the Minister of Finance and Treasury alone;
- Clarify the process through which SOEs provide community service obligations;
- Strengthen publication requirements of SOEs of documents or information about the SOEs that are tabled in Parliament; and
- Include a regulation-making power relating to the evaluation of Directors of SOEs and the election of Board Chairpersons and Deputy Chairpersons.
The Ministry of Commerce, Industry, Labor and Immigration (MCILI) which is responsible for the Commodities Export Marketing Authority (CEMA), the Ministry of Mines, Energy and Rural Electrification (MMERE) which is responsible for Solomon Power and Solomon Water and the Ministry of Communication and Aviation, which is responsible for the Solomon Islands Airport Corporation Limited, Solomon Islands Towers Limited and Solomon Islands Postal Corporation, together with the Solomon Islands National Provident Fund have expressed hesitations about certain aspects of these proposals in their submissions to the BLC last week.
MCILI’s Deputy Secretary Admin/Planning, Hunter Masuguria said while MCILI supports the objective of the bill to consolidate ownership monitoring responsibility for SOEs in the MoFT Minister alone, ministers of ministries with SOEs under their portfolios should not be omitted as proposed in the bill.
He said in the case of CEMA, the Minister for MCILI can play an assisting role in overseeing the smooth regulatory function of the authority to ensure smooth trade and marketing operations, while the authority focuses on its trade function per se.
Mr Masuguria said there should also be a mechanism in place to allow for check and balance in decision-making regarding SOEs.
“Hence, even though the MoFT Minister alone is to be responsible for the SOEs, we are of the view that the Minister for MCILI, in the case of CEMA, should provide some overseer roles and functions by way of assisting the MoFT Minister. So a clear segregation of role and functions is recommended.”
Mr Masuguria also expressed that MCILI should be invited to be part of any consultations organized for future reviews of the SOE Act as MCILI was unaware of ever being invited to participate in any consultation leading to the current amendments to the SOE Act 2007.
MMERE Permanent Secretary Dr Chris Vehe told the BLC that though MMERE supports the amendments to the SOE Act 2007, there are few issues that should be properly looked into in future amendments to the SOE legal framework.
Dr Vehe said the clause on SOE governance in the SOE Act 2007 limits interactions between MMERE’s Technical Divisions with SOEs under the ministry.
“In as far as our Technical Divisions are concerned and we intend to highlight here that there is a need for us to really look into the amendment holistically.
“If at all the need arises, we need to really look into how best our technical participation in the SOES can be harnessed, especially in being members of the board for the SOEs.
“We have realized that the Act sort of distances the ministry’s participation in overseeing its SOEs though it was the intent that the ministry would be playing an oversight role.
“Having non-ministry Directors or PS in the SOEs that are linked to the ministry is something that we should have proper discussions around. I will give you an example, we have issues with the general management and output of Solomon Power but there is very little that we can do.
“All we can do is to discuss the best we can do with the Technical Team and more so, when we receive the argument that some of our concerns are more on operations and that they (Solomon Power) only listen to their Board Members and so we really cannot do much here.”
MCA Permanent Secretary Alwyn Danitofea said MCA does support the intention to review the SOE Act considering the changing environment in the country.
He said the proposed amendments provide a much clearer chain of reporting in responsibilities and encourages and provides for an environment that limits discrimination, impartiality in decision-making.
PS Danitofea said MCA feels that having a single minister responsible for SOEs enables proper reporting within SOEs and it believes this amendment will improve governance and as sometimes reporting to two ministries may raise ambiguities.
However, he added that while MCA does see the importance of doing amendments to the SOE Act, the responsibilities of Ministers of technical Ministries is very important in determining Board Members and Board of Directors considering the technical nature of these SOEs.
PS Danitofea said a gap exists in SOEs as to having the right criteria to determine Board Members and Board of Directors.
He said for an SOE like the Solomon Islands Airport Corporation Limited that makes decisions in line with international best practices – very strict regulatory practices that are outside of MCA’s control, right people are needed to sit in the governance structure to make decisions.
“And I do think that if we forget the responsibility of the ministers of the technical Ministries in determining the possible representatives in the Board of Directors, it will impact on our operations,” PS Danitofea added.
SINPF’s Finance Manager Legal, Stanley Hanu said it is clear from the proposed amendment regarding consolidation of SOE ownership to go under the MoFT Minister that the government still wants to maintain ownership over SOEs despite removing the responsible Minister.
“The SOE Act, which is the principal Act enacted in 2007, has some wisdom in ensuring there are two ministers there.
“My point is that it seems to be a good idea to have two ministers responsible for SOEs as alluded to by the PS for MCA.
“There are technical aspects of SOEs, including their commercial side. Two ministers responsible for those two aspects would be recommended as contained in the current regime.
Mr Hanu added that in terms of the exercise of powers under the current regime, two ministers jointly exercising their powers can seem better than one to allow room for consultation between the two ministers.
He said the proposed consolidation of powers in one minister should come with a clear policy rationale and on that note, questioned the real rationale behind removing the responsible minister as provided for under the current regime.
“Whilst there might be justifiable reasons behind this proposal, monopolizing power in one person is sometimes dangerous.
“I note that in clause 6 of the proposed amendment, it is clear in that the Minister is responsible to Parliament. So whether two minister or one minister, they will be responsible to Parliament in terms of their accountability. So that’s on the consolidation of responsibility under the proposed regime.”
By DELI-SHARON OSO
Solomon Star, Honiara
