Govt defends bureaucrats on PARCO board as audit flags missing records

The federal government has defended the appointment of serving bureaucrats to the board of Pak-Arab Refinery Limited (PARCO), even as the Auditor General of Pakistan (AGP) has flagged the company for not providing records for audit scrutiny, The Express Tribune reported. 

In a statement, the Petroleum Division said senior officials serving in areas such as petroleum, finance, revenue, economic affairs, and related sectors bring experience in energy policy, public financial management, fiscal oversight, corporate governance, infrastructure, and public-sector accountability.

The division, however, did not publicly release the profiles of the nominees to support its claim that all appointments met the experience criteria cited in the statement.

The federal cabinet recently reconstituted the PARCO board and retained all existing directors except one. Jahanzeb Khan was replaced by Rabab Sikandar, a grade-22 officer of the Pakistan Customs Service.

Rabab Sikandar’s husband, Sikandar Sultan Raja, the incumbent Chief Election Commissioner of Pakistan, has also previously served on the PARCO board, according to the Election Commission of Pakistan’s website.

Of the five directors appointed by Pakistan, four are serving bureaucrats, including two ex officio members, while one is a federal minister. Secretary Petroleum Hamed Yaqoob Sheikh, who is chairman of the board, and Secretary Finance Imdadullah Bosal are ex officio directors.

Rashid Langrial, Chairman of the FBR, and Ahad Khan Cheema, Federal Minister for Economic Affairs, have also been reappointed as directors for a three-year term.

The issue has come at a time when the AGP, in its audit report on the accounts of the Petroleum Division, laid before the National Assembly last week, listed PARCO among entities that did not provide records for the financial year 2024-25.

The state of Pakistan holds a 60 per cent stake in PARCO and has the right to appoint six directors. The remaining seats are filled by the United Arab Emirates, which holds a 40 per cent stake.

Despite Pakistan’s majority shareholding, the audit report said PARCO’s accounts were not provided to the AGP office for audit purposes.

The Petroleum Division said the appointment of serving public officials to boards of state-owned enterprises, sovereign investment entities and strategic joint ventures was a recognised governance practice.

It said governments in OECD member countries, GCC states, Singapore, Malaysia and several European jurisdictions nominate senior public officials to boards where the state has major ownership or strategic interests.

According to the division, such representation supports shareholder oversight, informed decision-making and protection of public interest.

It maintained that appointments are made on merit and relevance, based on the statutory responsibilities of the officials’ offices and the expertise required to govern strategic national assets.

The statement also addressed the reported payment of $3,500 per board meeting to directors. The Petroleum Division said directors’ fees are part of corporate governance practice in both public and private sectors, but did not state the exact amount received by each director.

The division said directors’ remuneration is paid for statutory responsibilities and professional obligations, and is not an executive salary or employment benefit.

It said the fee is paid only for board meetings and not for committee meetings.

According to the division, the PARCO board holds four scheduled meetings annually. At $3,500 per meeting, each member receives $14,000 a year.