Title page 1

Contents 5

Disclaimers 2

Foreword 4

Executive summary 6

1. State ownership and public policy 8

1.1. Ownership rationales and the formulation of objectives 8

1.2. Definitions of PPO and PSO 10

1.3. Operational challenges and level playing field 12

2. Formalising public policy objectives and public service obligations in practice 14

2.1. Operationalising PPOs and PSOs 14

2.2. Overview of PPOs and PSOs assigned to and carried out by SOEs 15

2.3. Institutional design of PSOs 20

2.4. Handling competing objectives and trade-offs 20

3. Designing and monitoring public policy objectives and public service obligations 22

3.1. Classification of SOEs and public mandates 22

3.2. KPI establishment and monitoring of PPOs and PSOs 23

4. Market-consistent financing and compensation 27

4.1. Funding and financing of PPOs and compensation of PSOs 27

4.1.1. Funding and financing of PPOs 27

4.1.2. Compensation of PSOs 28

4.2. Impact on the level playing field 29

4.3. Oversight of PPO and PSO achievement 31

5. Transparency and disclosure frameworks 33

5.1. SOE-level disclosure frameworks 33

5.2. Owner-level disclosure frameworks 35

References 37

Notes 39

Table 1.1. Examples of ownership rationales 9

Table 2.1. Differentiating PPOs from PSOs across sectors 15

Table 2.2. Common PPOs in sectors in which SOEs operate 18

Table 2.3. Common PSOs in sectors in which SOEs operate 19

Table 4.1. Key themes across PSO compensation mechanisms 28

Table 5.1. Examples of exceptional PPO and PSO arrangements 35

Figure 1.1. From ownership rationales to PPOs and PSOs 10

Boxes 11

Box 1.1. Definitions of PPOs and PSOs in the SOE Guidelines 11

Box 1.2. The EU framework bearing on Services of General Economic Interests 12

Box 3.1. Classification of PSOs in Slovenia 23

Box 3.2. Performance evaluation procedure in Germany 25

Box 4.1. Preserving competitive neutrality when implementing PSOs 30