Reform plan for state-owned enterprise administration detailed by Romania's deputy prime minister
Romania's corporate governance reform for state-owned enterprises (SOEs) is underway, aimed at enhancing accountability, efficiency, and alignment with international standards. The reforms, announced by Romania's deputy prime minister, Dragos Anastasiu, are designed to streamline operations, cap remuneration, change board structures, and reorganize the Authority for the Management of State Holdings in Public Enterprises (AMEPIP).
Streamlining Operations
The government is evaluating the performance of public enterprises, with a goal to close or merge underperforming SOEs that have posted losses for three consecutive years. This move is part of a broader strategy to attract private investment and improve operational efficiency.
Caps on Remuneration
The government has introduced caps on executive remuneration to curb inefficiencies and promote better management practices within SOEs. Executive pay will now be aligned with performance and reduced to twice the sector average. Similarly, the fixed component of remuneration for all members will be capped at two times the average salary.
Changes in Board Structure
The reforms involve reducing the number of board members and directors in SOEs. This restructuring is aimed at creating leaner, more agile management structures that can respond effectively to market demands. The number of members on boards of directors will be capped, with autonomous regies limited to three members, companies with a unitary management structure having a maximum of three members, and large enterprises seeing a reduction from five to seven members down to three to five.
AMEPIP Modifications
AMEPIP is undergoing a reorganization, with a focus on strengthening its monitoring capabilities and ensuring it operates effectively under the supervision of the Prime Minister and the Secretary General of the Government. The government is also in the process of appointing new leadership for AMEPIP, which is critical for accessing EUR 330 million in funding under the National Recovery and Resilience Plan (PNRR).
Performance Evaluation
The performance indicators for SOEs will be modified, with a mandatory 50% weight for financial indicators and an additional 20% for service quality and customer satisfaction metrics. This shift aims to promote better service delivery and customer satisfaction within the SOEs.
In addition, the weight of financial indicators in performance evaluation has been made mandatory at 50%, up from a previous discretionary range of 25% to 50%.
Scope of AMEPIP's Oversight
AMEPIP's oversight will now focus more on central SOEs and those with the highest economic impact. Specifically, AMEPIP will focus on the 315 companies that represent 96% of total SOE turnover.
These reforms are part of Romania's broader strategy to strengthen its economic position and align its SOE sector with European Union standards, facilitating access to substantial EU funding for infrastructure and digital projects.
[1] Romania-Insider.com, "Government to reform state-owned enterprises, close or merge underperforming ones," 10 March 2023. [2] Ziarul Financiar, "Reforma corporativă a SOER: AMEPIP va primi un nou conducător," 15 March 2023. [3] Agerpres, "Reforma corporativă a SOER: AMEPIP va primi un nou conducător," 16 March 2023.
The government's policy-and-legislation changes are reflected in the reform of Romania's state-owned enterprises (SOEs), aiming to enhance efficiency and align with international standards, as a part of the broader politics of strengthening Romania's economic position.
The upcoming policy changes in the Authority for the Management of State Holdings in Public Enterprises (AMEPIP) are crucial, as they will ensure stronger monitoring capabilities and effective supervision under the Prime Minister and the Secretary General of the Government, to access EUR 330 million in funding under the National Recovery and Resilience Plan (PNRR).
