Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
7. Administering the Railways
• Maintain accountability to government and parliament for implementing
ownership policy
• Maintain defined relationship and continuous dialogue with external auditors
and state control organs within limits of existing legal framework; support
state audit institution tasks and take measures to respond to audit findings
• Publicly disclose reliable quantitative performance reports on exercising state
ownership, and achieving state objectives in the interests of the owners
through administering state-owned railways; (ad-hoc or permanent commissions
could maintain dialogue with parliament) 70 .
Ownership unit tasks relative to state-owned railways
The ownership entity will exercise state ownership rights in managing the railway
according to legal and institutional frameworks, which may include:
• Being represented at the general shareholders meetings and voting the state
shares
• Establishing well-structured and transparent board nomination processes in
the state-owned railways, and participating in the nomination of boards of
directors for each enterprise unit
• Creating conditions for state-owned railway boards to exercise their responsibilities
in a professional and independent manner
• Developing guidelines or codes of ethics for ownership entity members and
other state officials serving as state-owned railway board members
• Establishing aggregate reporting systems for regular monitoring and evaluation
of railway performance
• Ensuring that remuneration for board members is adequate to foster longterm
company interests and attract and motivate qualified professionals
Detailed information is presented below about the role of the ownership entity in
selecting board members, appointing the CEO, and separating management decisionmaking
powers.
7.4.2 Selecting the board of directors
If the state is the sole railway owner, it is responsible for nominating and electing
the entire board without consulting any other authority. The ownership entity
should ensure that the appointment process is transparent, based exclusively on
skills, competencies, and experience required in fulfilling the long-term strategy
of the state-owned company.
To this end, the ownership entity may find it useful to establish and maintain a
database of qualified railway board candidates, using an open competitive process,
professional staffing agencies, or international advertising to expand the list
70 Accountability requirements for the ownership entity should not restrict its autonomy
in fulfilling responsibilities. Cases in which the ownership entity needs to obtain ex-ante
parliamentary approval should be limited to significant changes in overall ownership
policy, the size of the state sector, or major transactions.
The World Bank Page 115