Monday, May 20, 2024
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Letter to the Editor

In an article titled “State enterprises debt repayment far below expectations: report”, published on March 30, 2024, we have come across arrears regarding the six-month report of the Public Enterprises Holding and Administration (PEHA).

The article reads “The repayment of foreign debt by state-owned enterprises such as the Ethiopian Electric Power (EEP) and the Public Enterprise Holding and Administration (PEHA) is dragging far behind schedule as the federal government continues to grapple with the country’s crippling forex drought.

PEHA is not a state-owned enterprise (SOE). It is a supervisory body for nine SOEs under it. There are also 27 SOEs under the supervision of Ethiopian Investment Holdings (EIH).

The article painted a picture that SOEs under EIH are paying their external debts in a better way compared to SOEs under PEHA.

 Some SOEs like Ethiopian Airlines are commercial, whereas others like the Ethiopian Railways Corporation are developmental. Most of the SOEs in Ethiopia are neither purely commercial nor developmental. Rather, they have a hybrid mandate.

Most of the SOEs under EIH are commercial, and those remaining under PEHA are mostly SOEs with developmental mandates rather than profit.

The way SOEs under PEHA and EIH operate, their business models, and the way they access local and foreign currencies, is different. To give you a perspective, the recently-established Liability and Asset Management Corporation (LAMC), which is under PEHA’s supervision, soaked over ETB 540 billion [in SOE debts]. A significant portion of these loans transferred to LAMC are from the SOEs currently under EIH.

Therefore, comparing SOEs under PEHA and EIH and giving your readers the idea that SOEs under PEHA are poorly performing is utterly wrong and misleading. We would also like to underline that PEHA is not, under any terms, in competition with EIH.

In general, there is significant improvement in SOEs’ project management, IFRS adoption, auditing, risk management, debt service, cost reduction, value addition and other reforms. However, The Reporter’s article portrays a bad image of the performance and management of SOEs in Ethiopia, where reputation risk is still a challenge.

Wondafrash Assefa

PEHA Director-General Office Head

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