SOE boards exempted from scrutiny

The federal government has dropped a proposal to hold the boards of directors of state-owned power companies responsible for their decisions on self-finance projects following concerns expressed by the Power Division secretary. The issue was taken up in a recent meeting of the Executive Committee of National Economic Council (Ecnec), revealed sources. All governments appoint boards of directors of stateowned companies on political consideration in a bid to keep a close watch on the daily affairs of such units.

Sources said that during discussion, the Power Division secretary voiced concern over the recommendation of the Central Development Working Party (CDWP) to hold the boards of directors of power distribution companies and National Transmission and Despatch Company (NTDC) accountable for the approval of self-finance projects. Ecnec members were of the view that the recommendation to hold the boards of state-owned enterprises (SOEs) accountable for their decisions would hamper the decision-making process.

They noted that the condition was unnecessary, which could hinder the initiatives and decisions taken by the respective boards. However, at the same time, Ecnec suggested that the government should be represented less on boards of power distribution companies. The Ministry of Planning, Development and Special Initiatives briefed the Ecnec meeting that the position paper for amendments to Ecnec decision of 2004 relating to the approval of self-finance development schemes of power distribution companies, submitted by the Power Division, was considered by the CDWP in its meeting held on October 25, 2021. CDWP recommended to Ecnec that boards of power distribution companies and NTDC should be held responsible for their approval of self-finance projects.

It also recommended that the independent boards of distribution companies, generation companies (Gencos) and NTDC should be fully empowered to approve self-finance schemes, except for projects which required budgetary support, donor funding and government of Pakistan’s guarantees. CDWP proposed that the Power Division should revisit the present composition of boards of power distribution companies, Gencos and NTDC to ensure appropriate public sector institutional representation including from the Finance Division, Planning Division and other relevant agencies.

It recommended that the Power Division should present investment plans and roadmaps of distribution companies, Gencos and NTDC to the CDWP for regular updates. It was pointed out that the Ministry of Planning would work on a mechanism to include the selffinance schemes being undertaken by the autonomous state-owned entities, including the power sector companies, in the future Public Sector Development Programme (PSDP). Ecnec reviewed a summary titled “Position Paper for Amendments in Ecnec Decision 2004 – Approval of Self-finance Development Schemes of Distribution Companies/ Entities”, submitted by the Ministry of Planning.

It decided that the independent boards of directors of distribution companies, Gencos and NTDC would be fully empowered to approve their self-finance schemes, except for projects which required budgetary support, donor funding and government’s guarantees. It also decided that the Power Division would revisit the present composition of boards of distribution companies, Gencos and NTDC to have appropriate public sector institutional representation including from the Finance Division, Planning Division and other relevant agencies. Ecnec decided that the Ministry of Planning would work on a mechanism to include the self-finance schemes being undertaken by the autonomous state entities in the future PSDP