Public policy objectives of state‑owned enterprises

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

While the previous section distinguished ownership rationales, public policy objectives (PPOs) and public service obligations (PSOs) conceptually, their formalisation in practice is often less clear-cut. Across surveyed jurisdictions, PPOs and PSOs are most common in energy, transport, telecoms and finance, where governments rely on SOEs to pursue broader economic, social or strategic objectives. Although the SOE Guidelines provide an important conceptual framework, institutional arrangements translating PPOs into operational mandates remain unevenly developed across countries and sectors. In practice, vague, overlapping or conflicting objectives can create governance, accountability and market-neutrality challenges. States, acting as active and professional owners, should therefore ensure that PPOs and PSOs are formalised coherently, transparently, and consistently underpinned by sound governance and accountability.

2.1. Operationalising PPOs and PSOs

Translating broader ownership rationales into concrete enterprise-level expectations requires governments to determine how PPOs will be pursued in practice. While PPOs often represent overarching policy goals, PSOs constitute one possible mechanism through which those objectives may be implemented. For instance, a PPO may be to ensure affordable and inclusive access to mobility services to all citizens, while the corresponding PSO could be to oblige a market actor providing passenger rail services (such as a railway SOE or private railway company) to operate rural and low-density routes at regulated fares and minimum service frequency. Likewise, a PPO to promote digital inclusion may entail a PSO requiring universal broadband coverage to all households, including those in rural and low-income areas at regulated prices. Table 2.1 outlines this differentiation and offers some examples of how PPOs and corresponding PSOs are typically operationalised across various sectors.

It is important to note that not all PPOs have a corresponding PSO, and in many cases PPOs can be effectively pursued through alternative policy instruments. Many PPOs pursued through state ownership, such as promoting innovation, supporting industrial development, or supporting small and medium-sized enterprises (SMEs) can also be achieved through incentives, or improving the market environment rather than through binding obligations placed on individual enterprises. In Germany, for example, state ownership is only allowed if a given PSO cannot be achieved better or more efficiently in any other way.

Table 2.1. Differentiating PPOs from PSOs across sectors

	Public policy objectives (PPOs)	Public service obligations (PSOs)
Definition	Broad, high-level aims pursued through state ownership to advance public interest (economic, social or strategic). Linked to ownership rationales.	Specific, legally binding duties placed on a market actor to deliver essential goods or services that markets would not otherwise provide at the desired quality, continuity or affordability. PSOs can operationalise PPOs.
Characteristics	Implemented through ownership goals, mandates, regulation or other means. Can coexist with commercial goals. Does not necessarily require compensation.	Usually non-commercial and require transparent, market-consistent compensation. Must be clearly defined, costed and accounted for to avoid over or under compensation.
Examples
Energy or utilities	Ensuring energy security by maintaining reliable supply and diversifying energy sources, especially during crises (e.g. state intervention in energy markets during shortages). Promoting sustainable energy and decarbonisation as part of climate change commitments (e.g. EU Green Deal).	Universal access to energy or utilities such as affordable electricity, water or sanitation, especially in rural and remote areas. Maintenance of critical infrastructure (e.g. national grids).
Transport	Reducing carbon emissions by shifting to more environmentally friendly public transportation systems (e.g. electric buses, railways).	Maintaining affordable access to public transportation in low-density, rural, or underserved regions, even if unprofitable.
	Ensuring compliance with safety, environmental, and accessibility standards (e.g. wheelchair accessibility, clean energy vehicles)​.	Promoting mobility for all, including vulnerable groups (e.g. subsidising transport for elderly or disabled passengers via affordability requirements).
Telecoms	Bridging the digital divide by investing in national digital infrastructure and promoting digital literacy.	Providing basic telecoms services at affordable prices, including high-cost rural areas where private investment is not viable.
Postal services	Modernising postal services to support the digital economy.	Ensuring affordable and accessible postal services across all regions, including rural and remote areas, to foster communication access and economic participation.
Banking	Promoting financial inclusion by ensuring access to basic financial services (e.g. low-cost bank accounts, mobile banking) for underserved populations​.	Guaranteeing access to basic banking services in areas or for populations underserved by the private sector (e.g. state postal banks)
	Supporting small businesses and the national economy through access to affordable credit and financial services (e.g. public loans, SME support programmes)​.

Source: OECD Survey on PPOs in SOEs.

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

Surveyed practices illustrate how SOEs function as vehicles for delivering PPOs and PSOs across sectors in which the state exercises ownership or control. The following country examples illustrate how PPOs and PSOs are implemented across different sectors (including energy, transport and infrastructure, finance, telecoms, postal services, manufacturing and real estate), often in conjunction with PSOs where delivery of a specific service is required. Among the largest central SOEs with assigned PPOs and/or PSOs reported by the surveyed jurisdictions, state ownership objectives typically reflect overlapping goals and obligations, which can be grouped by dominant sector of activity:

• Energy. Energy SOEs often combine PPOs, such as ensuring energy security, with PSOs such as maintaining energy stability, affordability and reliability. In Finland, SOEs such as Fingrid and Gasgrid are central to maintaining reliable electricity and gas transmission systems and achieving environmental PPOs. In Germany, SOEs play a crucial role in securing energy supply, particularly in response to geopolitical crises. In addition, PPOs enable countries to integrate sustainability-related or social inclusion goals, such as incentivising renewable energy into the grid, ensure affordability of renewable energy sources, and mitigating market failures in regions where private sector involvement may not be economically viable. For instance, in Colombia, SOEs lead the transition towards sustainable energy and energy efficiency projects.

• Transport and infrastructure (rail, road, air, and maritime). While many transport and infrastructure SOEs are subject to PSOs guaranteeing connectivity, they also advance broader PPOs related to national security, social needs, economic competitiveness and regional development. For example, state ownership of rail networks can promote access to reliable, accessible transportation, particularly in remote or less profitable areas, and while also supporting PPOs related to regional development and connectivity. For instance, in Australia, the national rail company is expected to ensure the reliable connection of various communities across the country, while also supporting regional economic development through ensuring a modern and efficient freight network. In Bulgaria, SOEs operating in the transport sector are also expected to provide fast and reliable emergency medical assistance and aid. For air transport, state ownership can be aimed at safeguarding national security through control over critical infrastructure like airports. Similarly, the ownership of maritime services and strategic ports exemplifies how a PSO (ensuring safe, efficient and continuous connections for example to smaller islands) can simultaneously serve a PPO (supporting local economic development, trade and economic resilience and national security).

• Finance. SOEs in the financial sector pursue a range of PPOs, from safeguarding financial stability to long-term economic development. Some intervene temporarily to address market failures or manage crisis-related assets, while others act as development finance institutions promoting long-term investment and inclusive growth. Latvia’s Attīstības finanšu institūcija Altum, a development finance institution, supports development objectives in the shape of financial support and grants. Another example is Austria’s federal liquidation management company which manages assets rescued in the wake of the 2008 financial crisis. National development banks in some countries pursue growth objectives by financing SMEs, innovation and green projects. In some cases, PPOs promoting financial inclusion are implemented through PSOs guaranteeing universal access to basic banking services, such as postal banking models that ensure citizen’s access to low-cost accounts and banking services in underserved areas. Financial SOEs’ mandates also relate to export-credit provision, infrastructure and housing finance, or agricultural lending in areas where private investment may be insufficient to meet public policy needs.

• Telecoms. SOEs in the telecoms sector typically pursue PPOs promoting digital inclusion and national connectivity, often delivered through PSOs guaranteeing universal access to essential communication services. In Australia, NBN Co ensures reliable, affordable, and equitable broadband across all regions, particularly in areas that would not have attracted private investment. Similarly, in Finland, Suomen Erillisverkot Oy secures reliable ICT services for public authorities and critical infrastructure operators, particularly during emergencies or crises. In Croatia, public ownership of broadcast towers and fiber-optic networks maintains national control over critical infrastructure while they are used by public and private service providers for commercial purposes. In Slovenia, Telekom Slovenije combines commercial and public mandates by developing innovative technologies while maintaining control over essential communication networks.

• Postal services. Postal SOEs generally fulfil PSOs ensuring universal access to essential mail and delivery services, particularly in rural, remote, or underserved areas, while also advancing PPOs related to regional connectivity, financial inclusion and digital transition. In Colombia, Servicios Postales Nacionales guarantees affordable nationwide delivery and supports regional economic integration. In Italy, Banca Posta combines postal and basic financial services to promote financial inclusion. In Switzerland, ongoing discussions on the “digital letter” illustrate how evolving PPOs can expand traditional PSOs to new communication domains. Across jurisdictions, declining mail volumes, growing parcel markets and increased private-sector participation are also prompting the gradual privatisation of traditional postal services and new regulatory approaches to universal service obligations, which are increasingly focused on parcel delivery and digital services rather than traditional letter post.

• Real estate. State ownership in real estate is often guided by PPOs promoting sustainable land use and preservation (e.g. forestry), affordable housing and efficient management of public assets, while some enterprises also carry out PSOs related to maintenance or remediation of public infrastructure. Italy’s EUR S.p.A. plays a key role in urban regeneration and the sustainable development of cities, including ensuring the development of infrastructure and services for local communities. In Germany, GESA oversees land decontamination, the demolition of hazardous buildings and redevelopment of contaminated sites. Across countries, real estate or infrastructure SOEs operating in real estate are used as instruments to optimise public-asset management and support environmental or social objectives, while governments use public-private partnerships, specialised investment vehicles or regulatory tools to maintain oversight and strategic control.

• Manufacturing. State ownership in manufacturing is generally guided by PPOs supporting industrial policy, innovation and national security. In Estonia, for example, Vireen performs waste management and animal by-product disposal services under a PPO ensuring environmental safety. In several OECD and partner countries, states participate in defence, pharmaceuticals, supply of grains, or critical minerals, which reflects strategic PPOs to preserve industrial capacity and resilience. For example, public ownership in pharmaceutical companies, such as those focusing on the production of generic medicines and extemporaneous pharmaceuticals, ensures that public health needs are met efficiently and equitably, with a focus on accessibility and affordability for all patients. In many cases, manufacturing SOEs have been progressively privatised or restructured, though governments may retain control or strategic influence through mechanisms such as golden shares, special voting rights or regulatory controls in areas considered critical for national security or supply chain resilience.

Table 2.2 and Table 2.3 provide an overview of commonly observed PPOs and PSOs, respectively.

Table 2.2. Common PPOs in sectors in which SOEs operate

PPOs	Energy	Transportation	Telecoms	Finance	Postal services	Real estate	Manufacturing
Emission reduction and net zero targets	Australia, Colombia, Costa Rica, Iceland, Ireland, Italy, Korea, Latvia, Lithuania, the Netherlands, Romania, Slovenia, Spain	Australia, Finland, Greece, Ireland, Latvia, Lithuania, Romania, Slovakia, Slovenia, Spain, Switzerland		Bulgaria, Lithuania, Slovenia, Sweden	Greece, Ireland, Italy	Germany, Greece, Slovakia	Lithuania
Freight, internationalisation, and supply chain resilience	Romania	Australia, Bulgaria, Costa Rica, Finland, Germany, Lithuania, Slovakia, Slovenia, Spain		Finland, Germany, Italy, Slovakia, Slovenia, Spain, Sweden	Australia, Slovenia	Greece
SME support				Finland, Germany, Greece, Korea, Lithuania, the Netherlands, Slovakia, Slovenia, Spain, Sweden
Investment in/ support of strategic economic activity	Bulgaria, Colombia, Costa Rica, Finland, Germany, Korea, the Netherlands, Slovakia, Slovenia	Italy, the Netherlands, Slovakia, Spain	Slovenia	Bulgaria, Colombia, Croatia, Finland, Germany, Italy, Latvia, Lithuania, the Netherlands, Spain	Australia	Slovenia, Spain	Slovakia, Spain
Fostering regional development		Croatia, Lithuania, the Netherlands		Bulgaria, Colombia, Croatia, Germany, Korea	Greece	Greece, Italy, Slovakia
Improving education, research and innovation	Spain		Spain	Italy	Italy	Bulgaria	Spain
Promoting culture						Greece, Italy
Financial returns and economic growth	Latvia	Latvia	Slovenia				Slovenia
Job preservation	Romania, Slovenia
Defence		Lithuania, Romania					Bulgaria, Italy, Slovakia, Spain, Switzerland
Digitalisation	Slovenia	Germany, Greece, Slovenia	Slovenia, Spain	Croatia, Slovenia	Greece, Italy, Slovenia	Greece

Note: The list is not exhaustive and is based on survey responses and their supporting information. The Secretariat’s assessment of what constitutes a PPO or PSO may differ from countries’ self-assessments.

Source: OECD Survey on PPOs in SOEs.

Table 2.3. Common PSOs in sectors in which SOEs operate

PSOs	Energy	Transportation	Telecoms	Finance	Postal services	Real estate	Manufacturing**
Price stability and affordability	Australia, Costa Rica, Finland, Italy, Lithuania, the Netherlands	Croatia, Italy, the Netherlands, Romania	Switzerland		Croatia, Finland, Greece, Italy, Romania, Spain	Korea, Slovenia, Spain, Sweden
Regional accessibility and connectivity	Colombia, Italy, Korea, Romania, Slovakia	Australia, Colombia, Costa Rica, Croatia, Estonia, Germany, Greece, Ireland, Italy, the Netherlands, Latvia, Lithuania, Norway, Romania, Slovenia, Spain, Switzerland	Australia, Costa Rica, Spain, Switzerland	Costa Rica, Italy	Australia, Bulgaria, Colombia, Costa Rica, Croatia, Estonia, Finland, Greece, Iceland, Ireland, Italy, Latvia, Lithuania, Norway, Romania, Slovakia, Slovenia, Spain, Sweden
Reliability of service provision	Lithuania, the Netherlands, Romania, Slovakia, Slovenia	Bulgaria, Croatia, Germany, Greece, Ireland, Latvia, Spain	Australia, Costa Rica, Latvia, Spain		Australia, Costa Rica, Ireland, Latvia, Spain, Sweden	Slovakia
Performance and quality requirements	Costa Rica	Greece, Norway, Romania, Slovenia	Costa Rica		Australia, Greece, Norway
Debt management or liquidation services*				Austria, Costa Rica, Croatia, Germany, Italy, Korea, Slovakia, Slovenia
Guaranteeing supply	Bulgaria, Estonia, Germany, Italy, Korea, Slovakia, Slovenia						Slovakia
Emergency and safety systems	Italy, Lithuania, the Netherlands, Slovenia, Spain	Bulgaria, Croatia, Finland, Slovakia, Slovenia, Spain	Estonia, Finland, Italy, Switzerland	Costa Rica, Iceland, Italy, Spain, Switzerland	Lithuania		Slovakia

Note: The list is not exhaustive and is based on survey responses and their supporting information. The Secretariat’s assessment of what constitutes a PPO or PSO may differ from countries’ self-assessments. *Debt management or liquidation services refers to a range of PSOs ranging from federal liquidation management such as the winding down of state aid and (financial) crisis interventions to access to credit for various sectors in the economy. **The manufacturing sector is typically not tasked with the delivery of PSOs, yet SOEs in this sector are tasked with services such as the appropriate deposal of mining waste, coin minting, as well as building state material reserves for times of crisis.

Source: OECD Survey on PPOs in SOEs.

2.3. Institutional design of PSOs

Where governments rely on SOEs or other market actors to pursue PSOs, the institutional arrangements through which these obligations are assigned, compensated and monitored become particularly important. Clear governance and legal frameworks help ensure that PSOs remain transparent, proportionate and operationally feasible, while avoiding informal steering of SOEs or distortions of competitive neutrality. The PSO framework should be underpinned by clear legal or contractual instruments. Accordingly, some countries have formalised governance mechanisms to clearly specify PSOs and structure the relationship between the state and the entity entrusted with their delivery.

An increasingly common governance practice is the use of performance or public service contracts to define and oversee PSOs. Countries such as Croatia, Czechia, Finland, France, and Italy, among many other EU jurisdictions, rely on performance‑based contracts to clarify and mandate PSOs. These contracts formalise the PSO through a contractual or legal arrangement setting out the service requirement, compensation, KPIs, duration, and reporting obligations. This creates clarity, accountability and separation between the owner’s role as shareholder and the operational delivery of the PSO. For example, in Italy, the PSO related to regional accessibility and affordability in rail transport is overseen by the Transport Regulation Authority and implemented through a PSO‑specific contract in conformity with the EU framework for SGEIs, with mandatory accounting separation from commercial activities as set out in Legislative Decree 175/2016.

2.4. Handling competing objectives and trade-offs

In practice, PPOs assigned to SOEs often entail inherent trade-offs between competing or partially conflicting objectives. For instance, an energy SOE may be tasked with advancing sustainability‑related PPOs in support of a country’s green transition, while at the same time being required to ensure energy security and affordability. The latter objective may necessitate the continued operation of non‑renewable generation assets or investment in existing infrastructure to guarantee supply continuity and system stability in the short to medium term.

Where competing or conflicting PPOs arise, ownership entities and SOE boards are generally best placed to identify, prioritise and manage these trade-offs. This includes assessing their financial and operational implications, as well as determining appropriate financing arrangements where PPOs entail additional public investment needs. Board‑level oversight and monitoring play a critical role in identifying mismatches or tensions between objectives. Once identified, such trade-offs can be communicated through regular dialogue with the state owner. Where competing PPOs persist or intensify, a review of the ownership policy and the underlying rationales for state ownership may be warranted in order to clarify priorities and enhance policy coherence.

Some countries have also developed institutional arrangements aimed at preventing or mitigating such trade‑offs ex ante. In Colombia, for example, the Directorate of SOEs evaluates potential trade‑offs and synergies across enterprises with a view to minimising aggregate costs and prioritising PPOs. To strengthen oversight and coordination, it established Grupo Bicentenario, a holding company overseeing the PPOs of 13 financial service SOEs. These entities operate in distinct sectors, each pursuing a specific public policy goal, for instance: (i) Banco Agrario, which finances the agricultural sector; (ii) Financiera de Desarrollo Nacional (FDN), focused on infrastructure development; and (iii) Bancóldex, which promotes international trade.

Key findings – Defining PPOs and PSOs and avoiding trade-offs

The SOE Guidelines establish that PSOs constitute a specific and legally defined subset of PPOs. PPOs articulate broader public‑interest objectives, while PSOs render some of these objectives into binding service delivery obligations. Surveyed practices suggest that best practice includes the following elements:

• Select the most appropriate instruments to pursue PPOs. Countries with stronger frameworks tend to assess whether PPOs are best pursued through state ownership and SOEs, or whether alternative instruments, such as public procurement, or delivery by government agencies would be more effective. Several jurisdictions, including Germany, consider whether certain PSOs can be achieved efficiently through market‑based frameworks rather than through direct obligations imposed on SOEs.

• Formally define and assign PSOs through clear institutional design. Countries with a robust institutional design of PSOs define and anchor them in performance‑based, contractual or equivalent legal instruments. Such arrangements may specify the scope and duration of the obligation, establish measurable performance indicators, and set out objective, transparent and pre‑defined parameters for compensation in line with competitive neutrality principles.

• Ensure governance capacity to identify and manage policy trade-offs. Where trade-offs among multiple or competing PPOs can arise, countries like Colombia have developed governance arrangements to identify, assess and manage them. This includes evaluating financial and operational implications, aligning expectations across the SOE portfolio, and ensuring regular dialogue between the state owner and SOEs to maintain policy coherence.