Islamabad:
The boards of eight power distribution companies, which were set up by the previous Pakistan Democratic Movement (PDM) government, were sacked on Monday on charges of incurring a whopping loss of Rs 589 billion for this financial year.
The PML-N government has also decided to enlist the services of the military and intelligence agencies to strengthen governance in these electricity distribution companies, invoking Article 245 of the Constitution and the Anti-Terrorism Act.
In addition, the government has approved the establishment of the Distribution Companies Support Unit (DSU) to mitigate losses going forward. The relevant army sector commander will serve as its co-director, with representation from the Inter-Services Intelligence (ISI), the Military Intelligence (MI) and the Bureau of Intelligence. The first DSU will be installed at Multan Electric Power Company (MEPCO), according to the decision.
The Cabinet Committee on State Enterprises (CCOSOEs) has approved the Power Division’s proposal to remove these boards and appoint new members for eight companies, apart from two operating in Sindh. Prime Minister Shehbaz Sharif approved the replacement of the boards, barring the two companies in Sindh.
The Commission also approved the Electricity Directorate’s proposal to appoint independent directors for specific electricity distribution companies, pending its submission to the cabinet, according to a finance ministry press release.
Prime Minister Shehbaz Sharif, who previously held office during the PDM government, led the decision-making process.
The PDM government had formed these councils between July 2022 and November 2022, based mainly on recommendations from coalition partners, resulting in appointments of politicians and their relatives. As a result, all the ten state electricity distribution companies suffered significant losses amounting to Rs 589 billion.
Sharif, in his initial tenure as prime minister, reconstituted these councils with political appointees.
The Sharif government now holds these councils responsible for “poor governance, performance and service delivery”. Some ousted board members contested the February 2024 election and currently serve as assembly members, having resigned post-election.
Prime Minister Sharif postponed the decision to replace the boards of Sukkur Electric Power Company (SEPCO) and Hyderabad Electric Supply Company (HESCO) for political reasons, despite their significant financial losses. SEPCO and HESCO are expected to post losses of Rs 59 billion and Rs 53 billion, respectively, this year.
The CCOSOEs, taking this decision, also approved new board nominations for eight electricity distribution companies including Faisalabad, Gujranwala, Lahore, Islamabad, Multan, Quetta, Peshawar and Tribal Areas. The summary will now be forwarded to the federal cabinet for formal approval.
The Hyderabad and Sukkur power distribution companies are among the ten companies expected to collectively post losses of Rs 589 billion in the current financial year ending June 30.
Sources in the power ministry revealed that the Board Nomination Committee had proposed reconstituting the Hyderabad and Sukkur boards, but the chief minister asked not to do so.
CCOSOE also classified Pakistan Television (PTV) and Pakistan Broadcasting Corporation (PBC) as strategic and core entities, deciding against their privatisation.
However, they categorized Pakistan Railways Freight Transportation Company, Pakistan Railways Advisory and Consultancy Services and Railway Construction Pakistan Limited as non-strategic and non-core eligible for privatization.
The committee rejected the Railway Ministry’s proposal to designate four railway companies as strategic and essential, ordering them to submit a transformation plan for review.
The proposal by the Ministry of Science and Technology was postponed, with directions to submit a business plan outlining the reforms for STEDEC, according to the announcement.
Recently, the Cabinet Committee on Privatization (CCOP), chaired by Ishaq Dar, directed the CCOSOEs to reassess the strategic status of these 40 entities. In the initial phase, three out of seven operations were deemed strategic and essential.
Prime Minister Sharif has pledged to reduce government involvement through aggressive privatization.
Energy Sector Tables
Senior Energy Ministry officials maintain that the new boards were formed without political interference. Amer Zia, an energy consultant, was appointed chairman of three councils (Islamabad, Lahore and Multan), while Zoe Khurshid Khan was appointed member of three councils (Faisalabad, Gujranwala and Lahore).
The government has attributed losses of Rs 589 billion this financial year to these independent directors. However, bureaucrats from the energy and finance ministries also served on these boards, remaining unaffected. They will return as ex-officio members.
QESCO’s board has been sacked as it suffered its highest ever annual losses of Rs 138 billion this financial year. Mahfooz Ali Khan was appointed as the new chairman, along with independent directors Rehmat Ullah Khan, Tahir Rasheed, Roshan Khursheed Bharucha and Ahmedur Rehman.
PESCO’s board has been replaced for making losses of Rs 137 billion, with Ali Gulfraz appointed as the new chairman for PESCO, TESCO and Hazara Electric Supply Company (HAZECO). Other independent members include Tahir Ali Khan, Fazal-e-Khaliq, Miss Saima Akbar Khatat and Saud Azam. TESCO posted a loss of Rs 51 billion – the fifth highest loss among all.
FESCO’s board was removed amid losses of Rs 17 billion, with Imran Zaffar appointed as chairman and Zoe Khurshid Khan, Pervvaiz Iqbal and Omer Farooq Khan as independent directors.
GEPCO’s board was sacked amid losses of Rs 12 billion, with Tahir Masood appointed chairman and independent directors Imran Zaffar, Zoe Khurshid Khan, Ilyas Ahmad and Muhammad Sadiq.
MEPCO’s board was sacked amid losses of Rs 38 billion, with Amer Zia appointed chairman and independent directors Imran Zaffar, Zainab Janjua and Khawaja Jalaluddin.
LESCO’s board was removed amid losses of Rs 43 billion, with Amer Zia appointed chairman and independent directors Zoe Khurshid Khan, Zaffar Mahmood and Asad Shafi.
IESCO’s board was replaced amid losses of Rs 41 billion, with Amer Zia appointed chairman and independent directors Aamir Matin, Tahir Masood and Miss Amna Abbas.
Published in The Express Tribune, May 21St2024.
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