President Clears Way for Dismissing DISCOs’ Boards
Issues Ordinance Empowering the Government to Dismiss SOE Independent Directors
Saad khan 
Islamabad: In a move aimed at swiftly addressing governance issues in the power sector, President Asif Ali Zardari has issued an ordinance, clearing the way for the removal of boards overseeing all loss-making power distribution companies (DISCOs).
The State-Owned Enterprises Governance and Operations Amendment Ordinance 2024, effective from June 5, 2024, was promulgated just ahead of the scheduled parliamentary sessions, signaling the government’s urgency to address the matter. The ordinance provides temporary legal authority to dismiss independent directors appointed on state-owned enterprise (SOE) boards.
Amendments to the SOE Act 2023 have been introduced through the ordinance, particularly focusing on Section 13, which previously mandated a three-year tenure for directors unless removed by specific provisions. The amended law now allows for removal based on recommendations from the board nomination committee without the need for an inquiry.
The board nomination committee, chaired by Power Minister Sardar Awais Leghari, had recommended the removal of directors from all 10 DISCOs due to allegations of poor governance and substantial financial losses. However, the Prime Minister sanctioned the dismissal of directors from eight companies, withholding action on two pending further review.
The amendments also entail a reduction in the SOE policy scope, excluding the evaluation of ex-officio and independent directors' performance. The board nomination committee will now assess director performance based on specified criteria outlined in the amended law.
This move comes amidst mounting financial losses projected for DISCOs in the current fiscal year, highlighting the pressing need for governance reforms in state-owned enterprises to mitigate economic challenges in the power sector.
