Budget Standing Committee task force reports on review of state-owned companies

MPs at Thursday meeting of the Budget Standing Committee

At the beginning of a regular meeting of the Budget Standing Committee (BSC) held on November 2, a task force that evaluated the current operations and financial situation of 87 state-owned enterprises presented committee members with a report on their findings.

They task force, led by head of the BSC Ch.Khurelbaatar, reported there were 40,364 employees working for state-owned enterprises in 2012, but their employees dramatically increased to 45,618 (13 percent) in 2015. The debt of the companies was 3.5 trillion MNT in 2012, and rose to 10.8 trillion MNT in 2015. The enterprises, which had no deficits in 2012, face deficit of 11.3 billion MNT as of 2015.

The task force pointed out that reducing their debt and deficit, developing their leadership and management, and enhancing the effectiveness of the state’s capital was essential.

Auditor General of the Mongolian National Audit Office (MNAO) A.Zangad said that the MNAO has taken control of audits for state-owned enterprises and limitations on the auditing of financial statements have been placed for enterprises with deficits, in violation of the law.             He pointed out that cases of suspected illegalities are being investigated.

Director of the Government Procurement Agency (GPA) Ts.Nyam-Osor stated that the GPA has the right to approve budgets for about 10 enterprises out of 87, and since the GPA’s establishment, a contract has been signed with the heads of state-owned enterprises to take steps to reduce their deficit and debt.

He underlined that he will dismiss the heads of companies if favorable outcomes do not arise. Ts.Nyam-Osor added that there will be a study conducted to identify the sources of challenges that the state’s companies face.

Member of Parliament Z.Narantuya put forward a proposal to prohibit top ministry officials from being appointed to the boards of directors of state-owned enterprises.
MP Ts.Davaasuren said that developing the legal and regulatory environment is very important for improving corporate governance.

The MPs voted against a proposal to include expenditures for new construction in 2017 in the budgets of the ministries. But a proposal to add 90.7 million MNT to the 2017 state budget, 13.5 million MNT to the Future Heritage Fund, and 519.5 million MNT to the Budget Stabilization Fund was approved.

The MPs also accepted a proposal to privatize some state-owned companies. It was suggested that the sale of Mongol Shuudan Communication Company could generate revenue of 20 billion MNT and Erdenet Bulgan Electricity Distribution Network Company could earn the state 30 billion MNT.