Power sector: no solution?

The power sector of the country or more specifically the Power Division (PD) of government of Pakistan continues to be in grip of sheer incompetence and mis-governance for a long period of time. Ironically, however, there appears no light at the end of the tunnel.

The efforts made during the third term of the PML-N government to reform public sector power utilities and privatise them did not bear fruit. The incumbent government’s repeated attempts to reorganize and restructure the sector have also not yielded any tangible results. The country’s leadership is now at the crossroads to either privatise the power utility companies outright or go for public private partnership system with management control in the hands of the private sector. Time for both the options is running out fast.

An example of the indifference of PD can be judged from its handling of the vacant positions of Chief Executive Officers (CEOs) of as many as 16 entities falling under its purview. Varied justifications provided by the PD for not filling the positions of CEOs are hilarious, to say the least. These clearly demonstrate a profound lack of seriousness on the part of government to inject some competence and efficiency into its ranks.

1) LPGCL (Lakhra Genco-VI): The position has never been filled through open market due to planned closure/retirement of the plant;

2) Alternative Energy Development Board (AEDB): Due to merger of AEDB with PPIB, the process initiated for the position of CEO AEDB was halted and is not deemed to proceed any further;

3) Power Holding Private Limited (PHPL): The post has never been filled through open market. It is a very small organization with very limited functions. The market-based appointment is not deemed cost effective by PD;

4) National Power Parks Management Company (NPPMCL): Due to start of privatisation of NPPMCL an employee of NPPMCL may continue to look after its affairs as a CEO;

5) Multan Electric Power Company (MEPCO): The CEO’s post has never been filled through open market due to certain legal issues. The ‘look-after’ charge has been assigned to a senior officer;

6) Quetta Electric Supply Company (QESCO): The top post has never been filled through open market due to certain legal issues. The ‘look-after’ charge has been assigned to a senior officer;

7) Tribal Electric Supply Company (TESCO): The appointment is delayed due to reconstitution of the new TESCO board;

8) Power Information Technology Company (PITC): The appointment has been delayed due to reconstitution of the PITC board;

9). Faisalabad Electric Supply Company (FESCO): The federal cabinet has rejected a summary of PD regarding appointment of CEO Fesco and directed the post be re-advertised;

10) Central Power Generation Company Limited (CPGCL) Guddu (Genco-II): The services of former CEO CPGCL appointed on competitive basis were terminated with the approval of CCoE (Cabinet Committee on Energy) on March 13, 2021 and ratified by Cabinet on March 16, 2021 due to last blackout of the national grid. A fresh appointment is delayed due to a high court decision of May 8, 2021;

11) Genco Holding Private Limited (GHCL): The incumbent CEO GHCL has been allowed to retain the “look after” charge of CEO GHCL till the appointment of a regular incumbent by the federal cabinet; and

12) Gujranwala Electric Power Company (GEPCO): The “look after” charge has been assigned to a senior officer. The process of appointing a permanent CEO has been initiated upon a court ruling.

All the above-mentioned entities are incurring losses. In any government set-up that deals with business none of the arguments of PD holds water.

A professional board of directors and a professional Chief Executive Officer with a proven track record is a prerequisite for efficient performance of an organisation. Their competence and integrity can make or break the organisation. Whereas, almost all public sector power utilities in the country continue to be headed by acting CEOs and their boards remain compromised. Court interventions are making things more difficult.

Under sponsorship of the World Bank, vertical unbundling of Wapda resulted in remodeled electricity generation and distribution companies. They were to be corporatised and then privatised and managed by a fully autonomous and professional board of directors and a professional CEO. Excellence in management was foreseen as the hallmark of remodeling.

None of the above happened. The newly-established generation and distribution companies moved under the domain and direct influence of PD. Politically-influenced boards and CEOs invariably supervised the operations of these companies. Frequently, an officer of PD enjoyed the charge of CEO as an additional responsibility.

If the PTI government really means business then it must revert to the World Bank original modeling of the utilities. It must, therefore, install fully autonomous boards and appoint professional CEOs and get the PD totally out of this business - which is not its business at all.

(The writer is a former President, Overseas Investors Chamber of Commerce and Industry)

Copyright Business Recorder, 2021