Better model proposed for SOEs

  • 2013-09-17
  • From wire reports

TALLINN - Estonian Economy Ministry adviser Erkki Raasuke has proposed a plan that aims to hand over the shares of state-owned companies to a new state-owned holding company, changing the governance of the state-owned companies so that a clear dividend and investment policy would be created and councils of state-owned companies would be de-politicized, reports Postsimees.

In everyday activities the new governing company would be in the Finance Ministry governance sphere, but in important decisions would be subject to government decisions.

Raasuke said that by thus better managing state-owned companies, the state could earn 75-100 million euros extra a year.

In principle, better management of three areas should yield a better result – strategic clarity of what the role of each of the state-owned companies is; second, aims that they are expected to reach and third, reorganizing the whole sphere investments.

A very big and fundamental change would also be when appointment of people in the councils of state-run companies wouldn’t depend on political agreements, but on competence. This is also the issue Raasuke forecast could become the stumbling block of his plan. “The issue is in control and power, we know that,” he explained.

Currently the Estonian state has stakes in 38 companies, and in 26 of them, the state has full ownership. Raasuke said that it wouldn’t be reasonable to handle them all the same. In Sweden, for example, which is one of the big role models of this planned Estonian reform, state-owned companies are distributed into two groups in respect of managing: those who act in the free market and those that have a public function. Initially, the free market companies could be consolidated in the ownership of the new state-owned company. This group could include, for example, Estonian Air, Port of Tallinna Sadam, EVR Cargo, Levira, Roads Technical Center.

Raasuke said that he hopes that the plan isn’t rejected initially, and in the Riigikogu elections it could end up in some party’s program.

Raasuke worked in banking for 17 years and quit his job in Swedbank in 2011 to become Economy Ministry adviser working on the issues of state-owned companies in 2012. From June 2012 to this summer, he was Estonian Air council chairman, with the task of reorganizing the ailing firm.