The anatomy of Discos’ BoDs

The whole nation is seized by the huge bills received by the people. KE – as a vertically integrated utility – with its own dedicated generation fleet and transmission lines, was quick to inform the public about NEPRA (National Electric Power Regulatory Authority) being responsible for the huge rates.

Pseudo experts have also chipped in since then with their words of wisdom. The GoP, on the other hand, while citing IMF (International Monetary Fund) constraints has as yet only offered installments to the poor protestors. We will have to wait and see as to where it all will lead us.

Looking into the innards of the Power Sector, we see its governance is with the non-professional MoE (Ministry of Energy), while the management of the DISCOs is seen to be with the various fully empowered BoDs responsible for everything–including billions worth of procurement and construction contracts. The problem is clearly at both these ends.

However, as the generalist civil service is not going away anywhere, we need to look into the anatomy of the BODs for possible solutions. More so, when even the federal government is restricted to only control and manage the DISCOs through its representation on the boards.

The legislation – primarily, the Companies Act and the SECP’s (Securities and Exchange Commission of Pakistan’s) Rules governing the functioning of the SOEs (state-owned enterprises) clearly require so.

In a situation where a BoD was not found wanting a few years ago, a lawyer of note, and now even more of eminence, as the member of the board secured an order from the IHC and assured the required longevity for the BoD. Since then, the succeeding Boards have assured us that the particular company has remained on the same low level.

In view of the above, it is of great importance to delve into the anatomy of the BoDs – especially, of the DISCOs – the show window of the Power Sector. History informs us that WAPDA’s then area Electricity Boards were wrested out of their moorings and corporatized as non-listed Public Limited Companies in 1996-97. And with this change, separate BODs were nominated for each of the Power Sector Corporatized Companies (PSECs) by the succeeding PEPCO (then in a way also a forte of the army-led management of WAPDA).

These were filled-up by sectoral nominees but which remained answerable to the WAPDA House where the Authority’s Chairman was nominated as the Chairman PEPCO with the Member Power as the MD PEPCO.

This concept remained in vogue till the then Ministry of Water & Power (now changed into the MOE’s Power Division and the Ministry of Water Resources) took over the job of making nominations and quickly filled the same with a mix of business and political persons.

Unfortunately, with each change of government at the Centre, the nominees became more and more political and also more non-professional. At the same time, the proficiency and seniority of the governmental nominees too dropped from Additional Secretaries to even officers of the rank of Deputy Secretaries – with the latter, in most cases simply opting to skip the board meetings or at the max to use skype or zoom to be visible in the proceedings.

The situation took a bizarre turn when an old KESC hand became the SAPM on Energy and brought in 42 former mid-level functionaries of the KESC – now dubbed as the KE, to take full control of the DISCO BoDs.

These poor people did try to deliver, but it all was too much for them. At the change of the then regime, everybody believed that the new nominees to the DISCO Boards would be experts to the core – especially, when everyone now recognized the importance of professionalism.

Unfortunately, the change was otherwise, and the new boards were duly packed primarily by political nominees alone. Furthermore, the boards have also been converted into training academies for the most competent progeny of legislators – the intake being divided equally between the provincial and the national assemblies.

The core professional or two are simply over-awed by the majority and either stay away or acquiesce, thus they are not much of use.

Furthermore, the members either liking the setting, lording over otherwise in-accessible functionaries or happy to pocket the honoraria amounts, are seen resorting to holding of myriad meetings each month, surely against the norms and the reason for the latest edict from the federal government restricting such meetings to just one or two in a quarter.

The academy of the boards is being put to great use by the permanent and contractual cadre of the DISCOs. By making them feel important, the cadre takes all of the trainees for a ride by arranging extensions in service and even promotions that otherwise would never pass the test of rules and regulations in vogue.

Besides this aspect, the basically non-professional BoDs are kept away from any foray into the operational efficiencies or allied issues. Consequently, the Boards have bogged down in approving extensions, promotions and up-coming recruitments; they are kept away from any scrutiny of operational working of the DISCOs – the main reason for steep downturn in all of the KPIs, etc. The one or two professionals amongst the boards either join the fray or are simply sidelined.

So, one thing is clear, the boards are restricted to the mundane relating to HR issues. And surely for procurement and contracting businesses. And so much is the availability of political capital that the board members regularly visit the DISCO HOs nearly every day. But the most damaging is the fact that the DISCOs are bereft of the needed advice and management control that only professionals could offer.

Thus, everything is in a flux and without any direction to manage the current crisis stemming out of the latest exorbitant bills as received by the people. The non-professional boards are oblivious of the issues / reasons for the rise in the electricity rates and, in a way, a party to the rot that is evident in shape of DISCOs receivables of Rs 2.188 trillion (ending May, 2023) and the Circular Debt of nearly Rs 2.500 trillion.

It would be of interest to know about such a case presently is being heard before the Baluchistan High Court – which relates to the pre-dominantly politically packed BoD of QESCO. The Hon’able Court is reportedly piqued about the situation and may accept the petition.

What could be the solution? Simply replacement of the present non-professional and political BoDs with purely professional boards or simply dispensing with the wayward boards altogether – especially, when the political capital of the Power Sector will not let the professional BoDs be.

This is the question that begs an answer; otherwise, the rot would continue. Besides, it is also important to suggest changes in the fit and proper criteria of the SECP as it needs to be further made stringent – otherwise, any possible revival of the DISCOs would remain a dream.

Copyright Business Recorder, 2023