Appointment of SNGPL BoD chairperson: AGP objects to PD’s wrong communication of Cabinet decision

ISLAMABAD: The Auditor General of Pakistan (AGP) has raised serious objection over the Petroleum Division whose wrong communication of the federal cabinet’s decision resulted in the appointment of Chairperson Board of Directors (BoD) of Sui Northern Gas Pipeline Limited (SNGPL) Roohi Raees Khan, who was not approved by the federal cabinet.

The audit officials asked the Petroleum Division repeatedly for a meeting on the matter but the division did not allow it. The BoD of the SNGPL, unanimously, elected Roohi Raees Khan as chairperson in a meeting held on November 20, 2019.

On July 26, 2023, the federal cabinet approved a new SNGPL BoD, however, the Petroleum Division asked the previous BoD to continue work for some time, sources in SNGPL told Business Recorder.

The Audit Report 2022-23 on the accounts of the Petroleum Division and Oil and Gas Regulatory Authority (OGRA) is likely to be taken up by the Public Accounts Committee (PAC) before the completion of the National Assembly’s term.

According to Rule 4(4) of Public Sector Companies (Corporate Governance) Rules, 2013, the chairperson of the board shall be elected by the BoD of the public sector company. However, this provision shall not apply where the chairperson of the board is appointed by the government.

During the audit of the SNGPL for the fiscal year 2021-22, it was observed that Petroleum Division submitted two names in order of priority (Roohi Raees Khan and Rizwanullah Khan) in its summary on June 4, 2020, for nomination for election of directors/chairperson on the Board of the SNGPL.

The federal cabinet approved the name of Rizwanullah Khan by omitting the name of Roohi Khan to be elected as chairperson. The deliberate omission of the name of Roohi Raees Khan tantamount to rejection/non-clearance of the candidature of Roohi Raees Khan as possible chairperson.

The Petroleum Division forwarded the name to the SNGPL Board in the same sequence as sent to the federal cabinet in its initial summary on June 4, 2020. On July 13, 2020, BOD of the SNGPL in its 555th meeting elected Roohi Raees Khan as chairperson BOD for three years who was not approved by the federal cabinet.

Audit contended that the letter on June 9, 2020, was not reflective of the decision of the federal cabinet as possible chairperson. Resultantly, a member not approved by the federal cabinet as possible chairperson, was elected as chairperson of the board.

The SNGPL management in its reply on January 12, 2023, contested the stance of audit on the ground that section 4(4) of Rules ibid was applicable in respect of those public sector companies where the chairman was also the chief executive while in the case of SNGPL, managing director, was the chief executive who was appointed by the federal cabinet while chairperson being a non-executive position was not appointed by the federal cabinet rather was elected by the BoD.

In the instant case, the person approved by the federal cabinet as the possible chairperson, resigned from the directorship, therefore, the BoD by exercising its legal authority under Section 192(1) of the Companies Act, 2017, elected the other person as chairperson.

Audit contended that the government has 57 percent stake in the company and specific rules of Public Sector Companies (Corporate Governance) Rules 2013 had been framed by the federal government. According to Section 4(1) of Rules ibid, “The office of the chairperson shall be separate and his responsibilities distinct, from those of the chief executive”.

Therefore, the management contention that Rules ibid were applicable where the chairperson and chief executive were the same, was not correct. Moreover, in view of the Rules 4(4) of Public Sector Companies (Corporate Governance) Rules, 2013 and persistent previous practice of the appointment of the chairperson after obtaining approval of possible chairperson by the federal government, the resignation of the nominated person must have been brought to the notice of the federal cabinet to seek advice/approval of some other name as possible chairperson.

Audit recommends to probe the matter with a view to fix responsibility for wrong communication of federal cabinet’s decision by the Petroleum Division and non-obtaining of nomination after the resignation of the approved candidate.

Copyright Business Recorder, 2023