Public sector companies' financial authority clipped

Public sector companies will now have to take approval from the cabinet committee on purchase when procuring goods and services under bigger deals -- a step added to ensure more transparency in the process.

Until now, companies in the public sector conduct their purchasing activities taking approval from their board of directors, as per the Companies Act 1994.

However, in case of public purchase by ministries and divisions if the bill amount is upwards of Tk 100 crore it has to be sent to the cabinet committee on purchase for approval.

This prompted the cabinet committee on economic affairs to form a committee for delegation of financial power of the public sector companies.

A five-member committee headed by the director general of Central Procurement Technical Unit under the planning ministry was formed to determine the rules to be followed by the public sector companies in case of purchases.

The five-member team made the recommendation and the committee on economic affairs approved it on Wednesday.

The committee's report suggested that the public sector companies' boards be given the authority to approve bills amounting to Tk 500 crore at most in case of service.

For procurement amounting to more than Tk 500 crore, they must be forwarded to the cabinet committee on purchase.

In case of procurement of goods, the ceiling is Tk 200 crore. For intellectual and professional services, it is Tk 50 crore. The finance division will later review the recommendations of the committee and issue an order on the financial authority of the companies, said a planning ministry official.

At present, there are nine companies in the public sector.

These are: Coal Power Generation, North West Power Generation, Electric Generation Co of Bangladesh, Ashuganj Power Station, Power Grid Co of Bangladesh, West Zone Power Distribution, Dhaka Power Distribution, Dhaka Electric Supply and Bangladesh Telecommunication Co.

The companies are running a total of 35 projects under the annual development programme.

Under these projects, Tk 7,175 crore was allocated in fiscal 2015-16.