Petroleum Division rescues Sui Southern MD from dismissal 

The Petroleum Division has intervened to prevent the ousting of the Managing Director (MD) of Sui Southern Gas Company Limited (SSGC). The justification? The expiration of the Board of Directors’ tenure and the procrastination in orchestrating fresh elections.  Sources reveal that the incumbent Chairperson of SSGC, Ms. Shamshad Akhtar — who concurrently holds the portfolio of the Federal Minister of Finance — is embroiled in grave allegations of conflict of interest and infringement of governance acts, including the State-Owned Enterprises (Governance and Operations) Act, 2023 (SOE Act), and the Companies Act, 2017.

As per sources, Ms. Shamshad Akhtar, donning the hat of an independent director, has been at the helm of SSGC’s Board of Directors for the past two years. She is purportedly implicated in deferring the SSGC Board elections since October 2023 — ostensibly due to discontentment with the nominations proffered by the preceding government.

Furthermore, sources assert that she has turned a blind eye to the contravention of the stipulations of the SOE Act and the Companies Act, 2007, rather than recusing herself from the chairmanship of SSGC whilst serving as the caretaker federal minister of the finance division.

The current Chairperson, sources argue, is ineligible to hold the office of Chairperson as Section 11 (i) of the SOE Act unambiguously states that an individual occupying a political office — regardless of any legislative role — is prohibited from being appointed or continuing the position of an independent director.

In a similar vein, sources affirm that Section 31 of the SOE Act obliges the federal government to establish a central monitoring unit in the finance division, tasked with the quarterly reporting on the overall performance of State-Owned Enterprises (SOEs).

In this context, sources contend that the Chairperson of SSGC simultaneously serves as the caretaker minister for the Finance Division — a role to which state-owned enterprises are mandated to report through the Central Monitoring Unit.

This dual responsibility, sources argue, engenders a significant conflict of interest. The Chairperson, being accountable for both the supervision of SSGC’s performance and the reception of reports through the Central Monitoring Unit of SSGC, orchestrates a situation where her responsibilities as Chairperson of SSGC and as a Minister for Finance overseeing financial matters intersect.

Such a scenario could jeopardise the independence and impartiality requisite for efficacious governance and reporting within the State-Owned Enterprises, sources caution. In light of this potential conflict, sources maintain that she is disqualified to be the Chairperson of SSGC.

Moreover, sources highlight that Section 166 (2) of the Companies Act, 2017 specifies that an independent director in the case of a public sector company should not be in service of any institution owned or controlled by the government.

Given that the Chairperson is actively serving as the caretaker minister for the finance division — an entity that is not merely owned and controlled by the government but is, in fact, a government institution — sources argue that this constitutes a clear breach of the specified provision.

Consequently, sources conclude that she is also disqualified under clause 166 (2) (h) of the Companies Act, 2017.

In an official communique to the Company Secretary of SSGC, the Petroleum Division, whilst underscoring the lapsed tenure of the incumbent Board, has put a halt to the Board’s manoeuvre to dismiss the MD of SSGC. The Division has also counselled the assurance of continuity of the present management, inclusive of the current Managing Director, and the expeditious conduct of the Board’s elections.

The Division’s letter, dated 28th December 2023, and titled ‘Elections of Board of Directors of SSGC’, stated, ‘Since the term of the current Board has already expired, it is required that elections must be held at the earliest. The Board may initiate the necessary hiring processes, however any new appointments/changes at senior management positions may only be formally decided by the new incoming Board’. 

It is of note that the elections of the Board of Directors of SSGC were initially slated for 23-10-2023. However, they were deferred for a span of six weeks, following the counsel of the Ministry of Energy (Petroleum Division). The Board subsequently sought approval from SECP, and the election date was extended to December 4, 2023.

Regrettably, the elections were not conducted within the stipulated time frame and have been adjourned for the fourth instance until March 4, 2024.

After the publication of this story, SSGC sent a clarification stating that the current SSGC board was appointed by the federal government in October 2019 for a period of three years. Subsequently, the new government reviewed the board composition and approved the nominations of 11 directors, including the current Chairperson Dr Shamshad Akhtar in August 2023.

Four extensions have been granted to the incumbent board, under the direction of the federal government. The board’s term was set to expire in October 2022; however, all extensions so far have been made according to the directives and after a consultation process with the Ministry of Energy (Power Division), SSGC stated.

It further stated that the extension of the board’s term is a mandate of the federal government, and elections can be held accordingly. The SSGC board has already decided to hold elections before the expiry of the current extension given by SECP until March 4, 2024. The board has requested the Ministry of Energy Petroleum Division on December 8, 2023, and January 11, 2024, to provide clear direction and guidance for the election, along with the number of directors to be elected and details about the composition of board members in each category (independent, others, and female), including their names. To date, the requisite information has not been received from the Petroleum Division.

SSGC stated in its response that the current MD, Imran Maniar, joined the gas company on February 4, 2021, on a three-year contract, which will automatically expire on February 3, 2024. There is no extension clause in the incumbent’s contract. Maniar is not being terminated; rather, he is completing his term as per the contract.