DISCOs’ boards sacked again

Distribution firms may suffer Rs589b loss; seaports declared strategic assets

ISLAMABAD:

The government on Thursday again sacked the boards of nine power distribution companies (DISCOs) due to their roles in the colossal losses of Rs589 billion in this fiscal year and also declared Pakistan’s three seaports, including Gwadar, as strategic assets.

It was the second time in one month when the Cabinet Committee on State-Owned Enterprises (CCoSOEs) decided to dissolve the boards of DISCOs after its first decision was buried under political pressure.

It also appointed a retired bureaucrat, Himayat Ullah Khan, as chairman of the boards of Peshawar, Hazara and Tribal Areas power distribution companies.

The committee decided to wind up the Pakistan Tourism Development Corporation (PTDC), National Construction Limited (NCL) and Pakistan Environment Planning and Architectural Consultants Limited (Pepac) while rejecting recommendations from the boards of those companies to declare them as strategic assets.

Just last week, Finance Minister Muhammad Aurangzeb approved Rs5 billion for the Green Tourism Initiative of the PTDC, being managed by the military authorities.

The CCoSOEs’ decision underscores that the government is ready to stop the bleeding of state-owned enterprises either through privatisation or dissolving the dead assets. However, headed by the finance minister, the CCoSOEs had to struggle with the Ministry of Defence Production. The committee did not make a decision on declaring Pakistan National Shipping Corporation and the Telephone Industry of Pakistan as strategic assets after the ministry refused to share their business plans.

In an official statement, the finance ministry stated that the CCoSOEs considered a summary presented by the Power Division carrying recommendations of the board nominations committee (BNC) regarding the boards of DISCOs. The cabinet committee approved the nominations for the boards of nine DISCOs.

However, once again the government protected the political interests of the Pakistan Peoples Party (PPP) and did not dissolve the boards of Sukkur Electric Power Company (Sepco) and Hyderabad Electric Supply Company (Hesco).

Sepco is projected to incur a loss of Rs59 billion while Hesco is likely to suffer a loss of Rs53 billion in the current fiscal year.

The CCoSOEs dissolved the boards of Faisalabad, Islamabad, Gujranwala, Multan, Lahore, Hazara, Quetta, Peshawar and Tribal Areas power distribution companies. It approved new board nominations for nine DISCOs.

The Power Division informed the committee that performance agreements had been signed with the respective chairmen on behalf of all independent directors to ensure the improved performance of DISCOs. It said that there had been no visible change in the performance of DISCOs and it was apprehended that they would register a loss of about Rs589 billion during the current financial year.

The Power Division changed its recommendations for the chairmen of six boards compared to the ones made last month and retained three old recommendations.

The Qesco board was dismissed for incurring the highest annual loss of Rs138 billion. Mahfooz Ali Khan was appointed the new chairman, alongside independent directors Rehmat Ullah Khan, Tahir Rasheed, Roshan Khursheed Bharucha and Ahmedur Rehman.

Pesco’s board was replaced for causing a Rs137 billion loss. Instead of its earlier recommendation to appoint Ali Gulfraz as the new chairman, the government has approved a retired bureaucrat, Himayat Ullah Khan, as the board chairman. Himayat Ullah Khan is also the chairman of the Tribal Areas Electric Supply Company (Tesco) and Hazara Electric Supply Company (Hazeco). Other independent members include Tahir Ali Khan, Fazal-e-Khaliq, Saima Akbar Khattak and Saud Azam for the Pesco board. Tesco caused a Rs51 billion loss – the fifth highest among all.

Fesco’s board was ousted over a loss of Rs17 billion. While withdrawing its earlier recommendation to appoint Imran Zaffar as the new chairman, the government has now appointed Omer Farooq Khanas as the new chairman of Fesco. Zoe Khurshid Khan, Pervaiz Iqbal, Adil Bashir and Amer Zia are new independent directors.

Gepco’s board was sacked for the loss of Rs12 billion. The government withdrew its earlier recommendation to appoint Tahir Masood as the new chairman and appointed Imran Zaffar as the new head. Among the independent directors were Tahir Masoo, Zoe Khurshid Khan, Ilyas Ahmad, and Muhammad Sadiq.

Mepco’s board was dismissed for a Rs38 billion loss. Amer Zia was appointed its chairman while the independent directors were Imran Zaffar, Zainab Janjua, Tahir Basharat Cheema and Khawaja Jalaluddin. Lesco’s board was removed for the loss of Rs43 billion, with Amer Zia being appointed the chairman and Zoe Khurshid Khan, Zaffar Mahmood, Tahir Basharat Cheema and Asad Shafi being independent directors.

Iesco’s board was replaced due to losses of Rs41 billion. Against the old recommendation to appoint Amer Zia as the chairman, the government has now appointed Tahir Masood as the new head.

The independent directors are Aamir Matin, Syed Aly Murtaza, Rana Abdul Sattar and Amna Abbas. As many as 34 independent directors had already resigned and the government removed only the remaining members and the chairmen. The cabinet committee declared the Gwadar Port Authority, Karachi Port Trust and Port Qasim Authority as strategic and essentials, keeping them under government control instead of privatising them.

The committee directed the Ministry of Maritime Affairs to ensure that the governance framework of port authorities was compliant with the SOE law. To this end, the ministry will initiate amendments to their respective statutes. The finance ministry stated that the Cabinet Division presented summaries related to PTDC and Printing Corporation of Pakistan (PCP). The cabinet committee directed to initiate the process of winding up the PTDC by clearing the ongoing litigation.

The committee also directed that the PCP board be reconstituted in line with the SOE law and policy and the business viability plan presented to the committee, before a final decision was made.