The federal cabinet on October 12, 2011 decided to wind up the organisation and transfer powers to Discos; however, the Cabinet's decision has not yet been implemented. Initially, Pepco, with headquarters in Lahore, was headed by top power sector officials. However, the organisation is being controlled by the Ministry of Water and Power and presently, Additional Secretary, Water and Power, Omer Rasul is heading the organisation.
According to sources, Pepco was responsible for the operations and management, monitoring and oversight of the companies falling within the operational purview of the Ministry of Water and Power, through management control, ie Discos, NTDC and Gencos. Subsequently, in 2010, the Cabinet Committee on Restructuring of Public Sector Entities (CCoR) restructured the boards of the companies, giving a majority representation on the boards to independent directors, and empowering the boards to independently manage the affairs of the PSEs.
The incumbent Managing Director Pepco, Omer Rasul, recently informed a parliamentary panel that complete liberalisation given to the Discos' boards led to mismanagement. He argued that the companies are wholly owned by the Government of Pakistan(GoP) , and the boards are all therefore its nominees, adding that grant of absolute independence to the boards has therefore resulted in a disconnect between the policy objectives of the State with respect to provision of electricity to consumers. As a result, the monitoring and evaluation of, and policy guidance to the companies, has also been hampered.
"The continuity of policies from the transition of Pepco managed companies to independent boards was also not managed properly, resulting in a deterioration of standards of performance by the companies, at times at the expense of government objectives and commitments," he added. His comments came after the Chairman Pesco board took on Pepco for "undue" interference in the affairs of the Discos. According to sources, Water and Power Ministry intervened in the internal affairs of Discos when it observed massive mismanagement. The Ministry began to rigorously monitor the performance of the companies, which has given substantially improved results.
The Managing Director Pepco maintains that there is a need for continuous and effective monitoring and evaluation mechanism of the companies, which ensures the connect between government policy with regard to the power sector and upholding the best practices of governance and management within the companies themselves. This role can be effectively undertaken by utilising Pepco as a central performance data resource for the companies.
He said, presently, Pepco's strength is above 400 employees of which around 140 experts will be retained to monitor the affairs of power sector. Though, the MD did not give any hint about the future of other employees, insiders claim that the remaining employees will be sent o Discos and NTDC.
Pepco, as management agent, will function as a permanent monitoring and evaluation cell of the Ministry of Water and Power, to oversee and ensure best practices in relation to corporate governance, and commercial, financial and operational performance of the companies with effective HR intervention and institutional improvements. In particular, Pepco would also oversee effective compliance of the Companies with the Public Sector Companies Corporate Governance Rules, 2013 (the Rules).
Genco's Holding Company, which was created for effective monitoring and evaluation of the performance of Generation Companies (Gencos), was also handicapped on account of lack of legal authority. Now the Ministry is all set to give legal coverage to the GHCL.