Govt mulls reconstituting boards.

ISLAMABAD -- As political appointees dominate boards of state-run companies, the Cabinet Committee on State-owned Enterprises has sought legal opinion of the Law Division about removing the existing directors and reconstituting the boards through bringing neutral experts and professionals.

The previous Pakistan Democratic Movement (PDM) government had appointed such board directors of power distribution companies, who had either political connections or were relatives of parliamentarians. It came at a time when the entire power sector had been plagued by circular debt, which piled up due to company inefficiency and rampant power theft.

The cabinet committee, in a meeting held in the last week of September, directed the Finance Division to seek advice of the Law and Justice Division for reconstituting the boards of state-owned enterprises (SOEs) and submit its response for review.

It was emphasised that the role of the federal government had been sufficiently explained in the SOE policy. However, the policy does not provide any fit-and-proper criteria for ex-officio directors.

Read PTI sole party opposed to curbing CJ's powers

It was explained that the fit-and-proper criteria had not been extended to ex-officio directors in Section 16(1) of the SOE Act 2023, therefore, it was not included in the policy.

The cabinet body discussed the possibility of making changes to the existing boards of directors in light of the SOE Act and sought the Securities and Exchange Commission of Pakistan (SECP)'s advice on the qualification of directors to ensure an effective composition of boards.

For the purpose, it was suggested, the legal advice of the Law Division may be sought.

The Finance Division informed the cabinet panel that the State-owned Enterprises (Governance and Operations) Act 2023 (the Act) was notified on February 2, 2023. Section 4(1) provides that 'the first policy under this Act shall be notified no later than one year from the coming into effect of this Act'.

The draft policy was prepared by the Finance Division where the role of the federal government was sufficiently explained in para 9, 10, 14 and 15. It was shared with relevant stakeholders including the ministries/ divisions having administrative control over SOEs for soliciting their views and comments.

Furthermore, in order to ensure transparency and take input from the general public, the draft policy was placed on the Finance Division's website on April 19, 2023.

The Finance...