Michelle V. Remo
Inquirer News Service
THE DEPARTMENT of Finance is set to come out with performance contracts that will force heavily losing government-owned and -controlled corporations (GOOCs) to shape up.
Failure to comply with the contracts would mean dissolution or privatization for the GOCCs, the DOF said.
Finance Secretary Margarito "Gary" Teves said the DOF was looking at implementing the performance contracts for 2006.
He is hoping that the contracts will result in a marked improvement in the financial standing of the state-owned firms, especially the distressed ones.
Teves said GOCCs would be classified into three types depending on their mandates: profit-oriented, cost-centered, and service centered state-owned companies. Their classification will determine the type of contract they will have to observe.
He said the GOCCs, established for the purpose of generating revenues for the government, would be assessed based on the profit they earned, while the rest would be evaluated based on the fulfillment of their mandates.
"We [DOF and concerned GOCCs] have to mutually agree on the objectives," Teves told reporters. "If they don't perform according to the contracts, then they could be phased out or sold."
The finance chief said the DOF would initially come up with contracts for the 14 monitored GOCCs.
These are National Power Corp., National Electrification Administration, Local Water Utilities Administration, Metropolitan Waterworks and Sewerage System, Home Guarantee Corp., National Housing Authority, Light Rail Transit Authority, Philippine National Oil Co., National Irrigation Administration, National Development Co., Philippine Ports Authority, Philippine Economic Zone Authority, Philippine National Railways and National Food Authority.
For this year, the 14 monitored GOCCs are expected to post a combined budget deficit of P42.5 billion this year. Although still a deficit, the figure is already a significant improvement from the actual budget gap of P90.7 billion recorded in 2004.
The DOF earlier said the expected improvement in the fiscal standing of the state-owned firms was due to the sale of some of the assets of Napocor, which accounted for the bulk of the combined deficits last year. The DOF likewise cited this year the relatively lower interest rate, which served to trim down the cost of debt servicing by the GOCCs.
At present, the GOCCs are being reviewed for possible rationalization of their organizational setup.
Officials from the DOF and the Department of Budget and Management met last week to continue discussing the rationalization plan.
The rationalization plan is in accordance with the issuance of Executive Order No. 366.