Present BoDs of Discos have to go

The de-bundling of Wapda’s Power Wing in 1996 has been traumatic, to say the least. Besides, it has also turned sour for the people of Pakistan through the successor’s continued inefficiency, bad consumer service, extremely wavered operations and lastly for also becoming a hand maiden to the political elite.

The last of the negatives have been on account of the Power Sector’s huge and colossal political economy. And now the Country has ended-up with a debilitating power tariff – which no one can pay, receivables of nearly Rs 2.5 trillion and an equal figure of circular debt.

Consequently, the population is unable to pay for the usage, the Country is rife with a culture of non-payment of bills and illegal abstraction of energy (outright theft), floundering industry and all in all an existential threat for the Country. Whatever one would say, the fact of the matter remains that it is an unenviable position.

While all facets of DISCO operation have been dissected by many, it has never been thought to pinpoint the one single issue that is responsible for the continuing rot. We have been talking about the faulty policies, non-professional governance and so on.

However, the issue of Discos’ management through the most important Board of directors has never been discussed in detail.

We further do not emphasise that with incorporation of Wapda area electricity boards to unlisted public sector companies, these new entities are now in a near free float with no assistance, whatsoever, from the thousands of professionals working with Wapda.

Thus, for tariff setting, design and planning, procurement & contracting, legal and allied issues, HRD – specially, training and shelter from social and political pressure, the Discos would now be on their own.

Additionally, the ensuing companies have now become distinct entities, which are inherently different from any other line departments of Federal Ministries and in fact follow the Companies Act and the owner viz. the Government of Pakistan can only control these corporate set-ups through their representation on the Board of Directors.

And as the law requires a majority of independent directors on the BoDs, the GoP is restricted to a minimal control of the Discos.

This fact alone leads us to the very serious requirement of assuring that both the governmental nominations and the independent directors being nominated by the government have to be the best possible.

This is all the more so because the boards in fact are even more powerful in comparison to the Federal Secretaries of the Ministries and that there is an obligation to keep an eye on the Discos through their representation on the boards.

Mindful of the above facts, the first boards notified in 1996-97 were a happy mix of professional lawyers, bankers, industry and business leaders and hardcore sectoral experts. However, on account of the Army’s takeover of Wapda management in October 1998, the Discos or their boards could not attain maturity and the situation went on as it is with PEPCO calling the shorts, which in fact then was an extension of Wapda itself, as the roles of the Chairmen of both Wapda and PEPCO rested with the same personality. The situation changed after 2004 with WAPDA becoming the old self.

With this change, the DISCO boards too were elevated and were further buffeted by induction of more professionals. The situation became even better when mid-2007 saw the actual bifurcation of Wapda and PEPCO.

During this period, this scribe represented the GoP/Sector on three of the loss-making Discos, where surprisingly, it was happily seen that rest of board members were very senior people with long public standing and possessing the required expertise, dignity and poise. This situation continued with FY 2010 showing tremendous results.

In 2011, when PEPCO was declared redundant at the behest of the World Bank and other MLDAs and with one stroke of pen PEPCO’s most professional oversight was replaced with the Ministry of Water and Power doing the biddings of the World Bank and others.

Quickly the boards were changed, but in a way in accordance with the SECP’s (Securities and Exchange Commission of Pakistan’s) then generic requirement where even gender considerations and balance were considered most important. This period saw a lady, the daughter of senior Pakistani doyen, chosen to be part of a Disco BoD. But luckily the general make-up of the boards remained quite proficient.

As the political economy of the Discos was a little too great and thus could not be left unattended, hence successive political governments started reaping the same through inclusion of their card holders and supporters in the BoDs.

By then the SECP, at the prodding of the MLDAs, had come up with comparatively stringent fit & proper criteria for the boards in addition to that for the CEOs and other corporate positions. Unfortunately, the governments while ignoring the same kept on diluting the boards through filling the same with political carpet baggers – to the detriment of the DISCOs.

As political appointees are myopic in thought and vision and thus the working of the Boards and the related DISCOs too became myopic. The situation reached a crescendo when the then SAPM on Energy (once CEO of KE) thought it appropriate to change the very complexion of the sector while considering his old alma mater as the example to emulate. Low and behold, as many as 42 ex-KE/KESC middlings were stuffed on the BoDs of all of the 10 DISCOs.

These persons (it also included a lady or two) did try but because of their weak antecedents could not change the DISCOs for better.

The only silver lining was that one of these gentlemen (who represented three Discos and the NTDC) was able to get himself selected as DMD of the very company where he made up a part of the BoD. Incidentally, the gentlemen continues with this position and presently looks after the power control for the whole country.

The last government had the KE infested boards changed with great funfair. Even applications were solicited, and the end product was the greatest surprise seen since 1996. Instead of doing away with the mistakes and omissions of the then existing boards, the new nominations simply changed the whole complexion and completely politicized the BoDs.

Experts are of the opinion that likeminded and even politically inclusive but highly professional people, could have been nominated for the Boards – but simply doing away of professionalism was never expected.

At the same time, the bleeding power sector had to be supported so that both availability and affordability of power supplies could be assured. Additionally, it was of extreme importance that the board members had to be of such high professional standards that they could supervise, manage at the macro-level and then assist the DISCOs in stamping out the endemic illegal abstraction of energy and the bills non-payment culture pervading in the field.

In a way adding insult to injury, the Punjab-based DISCOs are presently being managed by “totally inexperienced” members and while most of them are even green behind their ears. The most glaring of the example is the BoD headquartered at the Punjab’s capital city.

Thus, the fall from professional BoDs to “totally non-professional BoDs” is complete. The sad part is that all concerned are taking this fact in its stride with no efforts on the horizon for any change.

Even when we consider the present non-professional BoDs to be above board and consisting of people who are imbibed by pure national fervour, even then the situation cannot be appreciated because the DISCOs do not work on fervour alone – rather, there is dire need for high professional oversight and advice. The very fact that indicators of successful DISCOs are not evident and the GoP is put to great loss each month proves the above point.

The present anti-theft and recovery campaign also proves that both illegal abstraction of energy and the bills’ non-payment culture are endemic.

That as much as 19,415 customers have been arrested, 39,415 FIRs have been lodged and a colossal Rs 14 billion of such bills have been recovered further proves that both the Boards and Discos’ higher management are most deficient, otherwise, there should have been no need for the campaign to be set in motion.

As the boards are fully empowered and that they are fully responsible and competent to recruit CEOs downwards and to also approve and oversee procurement of billions, it becomes a foregone conclusion that the BoDs have to be professional and then be in a position to tutor and force the DISCOs to deliver. In other words, the present totally “non-professional” and “politicized” boards have to go. Replacement of these BoDs with the best of the best professionals has to be undertaken on the immediate basis in case the DISCOs have to operate.

Copyright Business Recorder, 2023