| 1 July 2020

COVID-19 and State-owned Enterprise Reform and Public-Private Partnerships

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COVID-19 is having a profound impact on SOEs across the Pacific.

SOEs involved in transport, such as airlines, airports, shipping lines, and ports, are contending with a sharp decline in demand that their business models never accounted for. Meanwhile, utility service providers may face cashflow constraints when some customers cannot pay their bills, or as commercial demand contracts as hotels and businesses shutter.

Governments across the region are reviewing SOE operations and providing urgent assistance where needed in order to maintain service delivery. They are also looking at options to sustainably manage SOEs in the medium-term and secure their viability for recovery in the longer-term.

Reforms supported by PSDI across the region have built SOEs’ resilience to economic shocks such as COVID-19. By fostering commercial independence, improving operational efficiency, and incorporating options to engage the private sector, these reforms have reduced or removed the need for government support, strengthened SOE balance sheets, improved service quality, and created opportunities for local businesses. As a result, many of these well-managed SOEs should assist rather than impede economic recovery.

Ongoing and planned support to Pacific SOEs will further enhance their capacity, and that of Pacific economies overall, to weather upheaval and uncertainty. In addition, PSDI is discussing opportunities to provide tailored advice to address immediate challenges SOEs are facing and to improve their contribution to recovery. These include support to:

  • restructure SOEs to reduce fixed costs and focus on essential services, some of which may be contracted as community service obligations, or contracted out to the private sector;
  • monetise SOE assets through sale and/or lease-back;
  • develop PPP opportunities within existing public investment pipelines, conduct PPP pre-feasibility assessments, and assist with PPP transactions; and
  • engage domestic sources of financing, such as provident funds, to consider PPPs within their investment portfolios.

For more information on PSDI's COVID-19 activities, click here.