Government Replaces DISCOs' Independent Directors to Boost Performance

The federal government has taken a significant step to address the poor performance of nine Distribution Companies (DISCOs) by deciding to replace their independent directors on the Board of Directors. It has been reported that these DISCOs are facing a potential loss of around Rs589 billion in the current financial year. Efforts have been made to engage with the Boards to improve performance and implement corrective measures. The reconstitution of these Boards has been deemed essential for enhancing operational efficiency, as highlighted in a summary presented to the federal cabinet for approval.

According to the State-Owned Enterprises (Governance and Operations) Act, 2023, the Board of Directors plays a crucial role in guiding the business operations of these DISCOs. The Ministry of Energy has put forward recommendations for new candidates to serve on the Boards of the nine DISCOs, with the exception of SEPCO and HESCO. These distribution companies, totaling eleven, are categorized as State Owned Entities under the SOEs Act, 2023.

Prior to the enactment of the SOE Act, 2023, the federal government had approved the current Boards of all DISCOs, except for Hazara Electricity Supply Company (HAZECO). Despite entering into performance agreements with independent directors, there has been a lack of significant improvement in the operational performance of the DISCOs. The Board Nomination Committee has now proposed a list of over two dozen candidates to serve on the Boards of seven DISCOs, with the aim of enhancing their operational efficiency.

The decision to replace independent directors on the Boards of nine DISCOs underscores the government's commitment to improving the performance of these crucial entities. By reconstituting the Boards and appointing new members, the government aims to drive positive change and enhance the operational efficiency of the DISCOs. This move is expected to have a significant impact on the energy sector and contribute to better service delivery for consumers across the country.