Transparency of state-owned enterprises

This is a pre-existing commitment the implementation of which was started in 2016 and was on-going when the commitment was made at the 2018 IACC. In the 2018–2019 National OGP Action Plan,¹ the government committed to the following:

4a) “the state agencies regularly publish information about the operation, governance, and finances of the SOEs. The 2018–2019 OGP Action Plan indicates that necessary information that should be published on the website of the National Agency of State Property (nasp.gov.ge) should include the name of enterprise, contact data, information about its establishment, governance, capital, activity, state share in its capital as well as financial standing and outcomes of the enterprise.”

In an interview conducted for this report, a representative of the Ministry of Finance noted that the first report published in 2016 about the operation, governance and finances of SOEs was a few pages long report about two or three enterprises only. This was the baseline. However, as of November 2021, the fiscal risk analysis produced annually by the MoF as an annex to the state budget, covers all SOEs operating at the national level as well as municipal SOEs. This document includes data on the profile, financing, dividends, lending, non-financial transfers and debt governance of the SOEs as well as their balance sheets and income statements with details on their assets, equity, liabilities, revenues and expenses. The document also provides sensitivity analysis of financial risks the state faces from several large SOEs over the next five years and the SOE reform concept.² In addition, the MoF launched a new portal, reportal.ge, which contains financial and management reports from SOEs and private companies operating in Georgia.

4b) “the adoption and publication of the data collection template”

In 2017, the National Agency of State Property (NASP) within the Ministry of Economy and Sustainable Development created a data collection methodology and guidelines³ as well as a standard template consisting of the necessary categories of information that should be provided by the SOEs operating under the NASP management.⁴ The SOEs under the ownership of other public agencies are also using this methodology. Since 2017, the NASP published the completed annual reports of the SOEs (97 as of November 2021). These reports include key information about the SOEs, such as the name of enterprise, contact data, information about its establishment, governance, capital, activity, state share in its capital as well as financial standing and outcomes of the enterprise.⁵

The Partnership Fund, a state-owned investment fund with equity of GEL2.5 billion (approximately US$0.75 billion) and with 100 per cent shares in the Georgian Railway and Georgian Oil & Gas Corporation, publishes annual financial and independent audit reports of its subsidiary companies.⁶ In its audited standalone financial statements, the fund also publishes information about the annual total income from dividends, including the names of subsidiaries and the amount of dividends received from them each year.⁷ Finally, the asset declarations of SOE directors are published annually on declaration.gov.ge run by the Civil Service Bureau.⁸

4c) “development of the corporate governance guide for the SOEs.”

In 2021, the MoF published a report about the corporate governance practices observed in the SOEs,⁹ while in September 2021, the government adopted the corporate governance code including relevant guidelines for the SOEs.¹⁰ This code was adopted in the form of a government resolution. It applies to the Georgian SOEs identified by the State Enterprise Reform Council under the government, which is headed by the Minister of Finance. The code is not publicly available. The MoF representative shared it to the author of this assessment. The code covers issues related to the SOEs’ governance structure, staff promotion and remuneration, ethics and conflicts of interest, internal audit and their transparency. The SOEs have to submit reports to the MoF about their compliance with this code and provide justification if they refuse to send such a report.

Overall conclusion: the analysis above shows that the NASP has developed and published a unified reporting template containing the name of the enterprise, contact data, information about its establishment, governance, capital, activity, state share in its capital, financial standing and outcomes of the enterprise. The SOEs under the ownership of the NASP complete this template and publish it on the agency’s web page, nasp.gov.ge, on an annual basis. The corporate governance code was also adopted in the form of a government resolution. Therefore, this commitment can be considered as fully implemented.