ISLAMABAD: The Federal Cabinet has reportedly not approved physical presence of Pak Army officers in Performance Management Units (PMUs) at power Distribution Companies (Discos), reportedly to avoid negativity about army, well-informed sources told Business Recorder.

The Power Division’s summary “strengthening management in Discos” was on the agenda of Federal Cabinet in its previous meeting but it could not sail through.

“Power Division’s summary has been returned

with the direction that it should be revised properly after exclusion of Army officers from the proposed PMUs,“ the sources added.

Discos likely to be put under army’s microscope

The Finance Division opposed the proposal of Power Division regarding establishment of PMUs in loss-making power Distribution Companies (Discos) under senior army officers (brigadiers), arguing that it will further deteriorate governance within Discos.

Power Division, in its summary had sought Federal Cabinet approval for establishment of PMUs in five high loss-making power Distribution Companies under a serving Brigadier of Pak Army arguing that Discos dismal performance has made the power sector unsustainable – a summary prepared in light of a decision of Apex Committee (AC) of Special Investment Facilitation Council (SIFC).

According to sources Power Division in its summary noted that both the Defence Ministry and Interior Ministry have not offered any comments despite repeated requests.

Meanwhile, Ministry of Interior, in its comments suggested that a long-term restructuring of distribution and collection of bill system may be evolved to put the system on track, adding that this additional burdening of institutions like FIA, NADRA and IMPASS may adversely affect delivery of their core functions.

Commenting on the stance of Interior Ministry, an official in Power Division said that the purpose of making NADRA and FIA part of PMUs was to move against defaulters expeditiously so that their CNICs and passports are blocked forthwith.

The appointment of suitable personnel as Chief Executive Officers (CEOs) in these Discos, under Ministry of Energy (Power Division) has always been a challenge for the government.

“The proposal contained in the draft summary for the Federal Cabinet regarding establishing of PMUs headed by a BS-20 officer of Pakistan Army and manned by officers from Pakistan Administrative Service (PAS), Federal Investigation Agency (FIA) and intelligence agencies has not been endorsed,” the sources quoted Finance Ministry as saying.

According to Power Division, various modes were experimented in the past, but all such efforts to fill the positions of CEOs, with required skill-set and expertise to turn around these companies, failed. As a result, power sector has been beset with inefficiencies primarily due to lack of effective leadership resulting in an ever rising circular debt reaching Rs. 2.310 trillion as of June-2023. The receivables of Discos have also piled up to the tune of Rs. 1.786 trillion, thus making the sector unsustainable.

According to Power Division, during Financial Year-2023-24, it is apprehended that Discos may make a loss of around Rs. 589 billion which includes under recovery and loss above NEPRA’s threshold.

These companies were created for corporatization and to further privatisation in the distribution system. However, due to rampant mismanagement, improvement in the process for further reforms has been derailed. Resultantly, these entities have now become a constant source of bleeding for the national exchequer.

Power Division argues that in order to minimise losses in power sector, Government has launched a campaign against electricity theft and recovery from defaulters. However, it is apprehended that weak leadership of Discos may not be able to fetch desired results. Specifically, Discos, ie, HESCO, SEPCO, PESCO and QESCO are facing serious capacity limitation of management and requiring administrative assistance, which is likely to levy a huge toll on administrative and financial position of these Discos.

The Apex Committee meeting of SIFC held on October 4, 2023 decided to establish an Anti-Theft Taskforce, comprising officers from law enforcement, district administration and intelligence agencies, and their subsequent attachment with Discos incurring significant losses, i.e., QESCO, PESCO, SEPCO, MEPCO and HESCO.

The pilot project will commence with HESCO and be replicated in other Discos after evaluating the results of the pilot intervention in HESCO.

After explaining reasons, Power Division submitted following proposals for Cabinet approval: (i) a PMU be established in each Disco. As a pilot first PMU shall be established in HESCO consisting of officers from PAS, FIA and Intelligence Agency headed by a BS 20 officer of Pakistan Army. This PMU shall report directly to Secretary Power Division; (ii) Ministry of Defence may post one serving BS-20 officer from Pakistan Army, along with team and allied staff, for strengthening the management of each Disco. Initially, only one such team would be required for HESCO; (iii) Ministry of Defence may post one officer from Intelligence Agencies in each Disco; (iv) a serving Police Officer of BS-18 may be posted in each Disco by respective Provincial Police authorities for coordination with police authorities in the Anti- theft campaign; and (v) NADRA/IMPASS and the banks may be directed not to issue or renew passports or open bank account of those defaulting individuals, whose lists shall be shared by Power Division with these authorities based on the input provided by PMU.

Power Division further stated that grade-17 officers from Pakistan Administrative Service (PAS) were posted in all Discos. However, these officers have been posted out; and FIA officers of grade 17/18 were attached to three Discos (HESCO, SEPCO and PESCO) in the first instance, to facilitate institution of immediate action against colluding employees of Discos in theft and under recovery campaign.

Finance Division, in its comments argued that theft control and performance management are two entirely different functions, adding that Terms of Reference (ToRs) and Key Performance Indicators (KPIs) of the proposed PMU have not been indicated.

The proposal will entail additional costs for the companies who are already making losses, the sources quoted Finance Division as saying in its comments sent with approval of the Finance Secretary, who is an officer of PAS, erstwhile District Management Group.

Copyright Business Recorder, 2024