Govt mulling to dissolve DISCO’s board of directors

The government has been mulling to dissolve the incumbent board of directors (BoDs) of all power distribution companies (DISCOs) and power division has verbally stopped the BoDs of DISCOs from taking ‘important decisions’, said sources on Wednesday.

According to sources, the government in an apparent bid to appoint blue eyed BoDs of DISCOs has been making efforts to dissolve the incumbent BoDs of DISCOs. They said that the power division has barred the BoDs of DISCOs from taking ‘important decisions’ regarding their respective power utility. They said the power division has also decided to review and analyse the performance of the boards. The power division has conveyed its intentions to the board members and senior management of all DISCOs, said sources.

“The power division has verbally asked BoDs of DISCOs to avoid taking decisions pertaining to financial matters,” said sources.

They added that BoDs of DISCOs have been advised to approach the power division before taking important decisions.

Sources also said that the government is more interested to appoint favourite directors in the boards of DISCOs by dissolving the present BoDs of DISCOs. They said that new BoDs of DISCOs will be notified after getting a formal approval of the federal cabinet.

It is pertinent to mention that there are ten DISCOs under the administrative control of the Ministry of Energy (Power Division). These  DISCOs are Public Sector Companies (PSC) as defined under Section 2 (1) (54) of the Companies Act, 2017 and Rule 2(1) (g) of the Public Sector Companies (Corporate Governance) Rules, 2013 (CGR).

Since the federal government owned these DISCOs, it had the power to nominate all directors of their BoDs (Section 165 of the Act). In terms of rule 3(1) of the CGR, Directors of a PSC have to possess a requisite range of skills, competence, knowledge and experience so that BoD as a group includes core competencies and diversity considered relevant in the context of the functions of the PSC. Rule 3 (2) of the CGR lays down that the Board shall have at least 1/3 of its total members as Independent Directors.

Section 166 of the Act provides that such independent directors shall be selected from a data bank containing names etc of the persons who are qualified and willing to act as independent directors, maintained by an institution as may be notified by the Securities and Exchange Commission of Pakistan. Pakistan Institute of Corporate Governance is such an institution and maintains a data bank of independent directors on its website.