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Tender: Improving Governance of State-owned Enterprises

Croatia, 25 January 2017

Project Description

In Croatia, state-owned enterprises (SOEs) play an important role in the domestic economy. According to European Commission estimates employment in state-owned enterprises represents 12 per cent of overall employment, while they represent 18 per cent of the total turnover and 30 per cent of total assets in Croatia. The state is heavily present in public utilities and transportation, where the share of employees working for the SOEs in 2012-2013 reached 79 per cent and 45 per cent respectively. Other sectors with significant state presence include information and communication (14 per cent), construction (8 per cent) and manufacturing (6 per cent).

In this context, the Croatian authorities, in particular the State Property management Administration (DUUDI), recently transformed into the Ministry for State Assets (the Ministry), have requested the European Bank for Reconstruction and Development (the EBRD or the Bank) to provide technical assistance to improve the governance of SOEs in line with the 2015 and 2016 Council Recommendations to Croatia, including, inter alia, "advancing the divestment process of state assets and reinforcing the monitoring of state-owned enterprises performance and boards' accountability, including by advancing the listing of shares of state-owned companies" (the Project).

The state portfolio of SOEs was until recently administered by the State Property Manage-ment Administration (DUUDI), and upon its transformation into the Ministry, the Ministry which will assume all the responsibilities of DUUDI, including management, together with the line ministries, of companies of strategic and special interest. In particular, 43 companies classified as being either of 'special interest' or of 'strategic interest' are in the domain of DUUDI/the Ministry. All other companies (in total 470 of which 35 are in majority ownership of central government) remain in the domain of the Restructuring and Sale Center (CERP).

Assignment Description

The Bank now intends to engage a consultant (the Consultant) to support the Ministry and CERP in improving the governance of SOEs through the development of a unified reporting and monitoring framework of SOEs (the Assignment).

The expected outcome of the Assignment is the development and adoption of a set a guidelines and recommendations by the Croatian authorities and SOEs supporting the strengthening of public administration, corporate governance and business planning for SOEs in Croatia, and enhanced stakeholder capacity in applying new methodologies and practices.

The selected Consultant is expected to provide the following services:

Recommendations on improving internal processes

  • Review current legal, regulatory and internal frameworks governing status, processes and functions of Ministry/DUUDI and relations with key stakeholders

  • Development recommendations on improving the Ministry's internal processes, including monitoring, control and communication.

  • Organise and deliver workshops for selected SOEs, Ministry and CERP staff on improving internal processes based on recommendations.

Guidelines on setting corporate targets and guidelines for budget and financial reports compilation and reporting

  • Develop a methodology for setting corporate targets including the clear identification of roles for all stakeholders in the process as a part of medium-term business planning.;

  • Develop a methodology for evaluation of targets including financial and operating benchmarks to similar companies in the private sector or comparable SOEs in other countries;

  • Organise and deliver workshops for selected SOEs, Ministry and CERP staff on setting corporate targets.

Guidelines for preparation and evaluation of SOEs' medium term business plans

  • Develop a manual for preparation of SOEs' medium terms business plans, providing a framework including financial model information, KPIs and references to different methodologies;

  • Develop a methodology and guidelines for Ministry for the evaluation of business plans;

  • Organise and deliver workshops for selected SOEs, Ministry and CERP staff on the supervision of SOEs' strategies and business plans and transferring knowledge on applying the proposed methodologies and guidelines.

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