ISLAMABAD: Giving impetus to the power sector reforms, the government has announced dissolution of the existing board of directors of the all power distribution, generation and transmission companies with immediate effect from November 22.
An official notification on Monday issued said the existing boards will cease to function immediately and new boards will be notified as soon as possible. This decision has been made in the wake of ongoing power sector reforms.
Official sources said the decision to dissolve the exiting boards was finalised before the Eid holidays. They said the government had already finalised names for the new boards, adding that an announcement would be made within the next few days.
Calling the formation of the boards a cornerstone of the government’s power sector reforms, they said the empowered boards would decide on the management changes and curtailment of losses. This would give impetus to the much-delayed power sector reforms.
Granting of full autonomy to the distribution and generation companies had been the key demand of the World Bank and Asian Development Bank for power sector reforms.
The government is incurring a massive subsidy of Rs 20 billion per month on account of differential between the actual and notified tariff. The International Monetary Fund has already warned the government, saying the power subsidy could bankrupt the country. The country’s power sector consists of 14 state owned entities, including nine distribution companies, four generation companies and one transmission company.
The government has already assured the international financial institutions (IFI) that the power sector reforms will be completed during the current financial year. The government has assured that the business plans of distribution and generation companies would be finalised and smart meters would be introduced. IFIs have asked the government to reduce line losses and improve recovery. These would be the immediate challenges before the new boards
The government’s announcement said the reconstituted boards would be set up on professional lines in accordance with the guidelines of the Cabinet Committee on Reforms (CCOR), with special emphasis on representation from the private sector professionals and consumers.
The guidelines stated that the size of the proposed size of boards may range between 8 to 10 members.
The CCOR decided that the ministers, secretaries and government officials would not be nominated as chairmen of the boards. The office of chairmen and CEO would be kept separate. Representation from the administrative ministry on the boards of private sector entities should be restricted to one. The CEOs and one other executive, head of finance of the entity would be included in the boards.
