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1024hr
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ISLAMABAD: The federal government is to alter composition of the boards of Power Distribution Companies (Discos), National Transmission and Despatch Company (NTDC) and Generation Companies (Gencos) to have appropriate public sector institutional representation including that of Finance Division, Planning Division and other relevant agencies, well informed sources told Business Recorder.

Most of the members of existing Boards of Discos and NTDC belong to one or two private sector companies, who were appointed on the recommendations of former SAPM on Power Tabish Gauhar.

The decision to alter composition of existing boards of Discos, NTDC and Gencos was taken at a recent high level meeting meant to fully empower the boards to approve their self-financed projects on the pattern of SSGCL and SNGPL, except for projects which require government budgetary support, donors’ funding and GoP’s guarantee.

Govt starts paying Rs134.8bn to IPPs as Discos’ equity

Power Division, sources said, has submitted a position paper for amendments in ECNEC decision of November 5, 2004, regarding approval of self- financed development schemes of Discos/ entities.

The sources said, ECNEC’s decision was circulated by MoPD&SI on December 18, 2004 regarding “procedure for approval of self-financed development schemes of autonomous organisation” which has not been adopted by Power Division and its executing agencies, i.e., Discos & NTDC.

For the last 16 years, they have continued processing their projects under self-financed schemes with approval of CDWP/ ECNEC. Accordingly, the 6 STG projects were already approved by ECNEC with certain scope of work and cost. If there was any change, then it was mandatory to apprise ECNEC instead of bringing a new PC-l of 7th STG on the agenda of DWPs for approval. Moreover, Power Division had earlier submitted 7th STG projects of FESCO (Rs.29 billion) and LESCO (Rs.24 billion) to Planning Commission in 2016.

The sources said, for these PC-Is, pre-CDWP meetings were held in Energy Wing MoPD&SI. Certain decisions were taken and communicated to the concerned Discos for compliance. However, due to non-compliance by Discos/ Power Division, the projects were returned to Power Division in October 2017.

Later, all self-financed projects of Discos were returned to Power Division on their request dated April 26, 2018.

He further stated that in order to streamline the issues of ex-post facto approval and revised PC-Is of IESCO by DWP, a meeting was also held on September 24, 2019 under the chairmanship of Deputy Chairman, Planning Commission. It was decided that IESCO will process their revised 6th STG project through CDWP/ECNEC.

For evolving a proper mechanism/SoPs for DWP of Discos, on July 16, 2020, Planning Commission instructed Power Division to initiate a position paper for approval of ECNEC by formulating comprehensive Terms of References (TORs/ SOPs), defining ceiling powers, re-composition of DWP of DISCOS on the pattern of DDWP/CDWP and devise a mechanism for ex-post facto approval of already executed works. Further, Energy Wing, MoPD&SI on the request of Power Division, informed on December 29, 2020 that in the absence of concrete mechanism for DWP of DISCOs, Power Division may process their self-financed schemes for CDWP/ECNEC as per ECNEC decision of 2004.

Power Division neither submitted self-financed schemes of Discos for CDWP approval nor finalized the mechanism for DWP Discos for the last three years. Now, Power Division has submitted a position paper for approval of CDWP/ECNEC regarding amendments in ECNEC decision of 2004 for approval of self-financed schemes to the extent that “The quorum for the meeting of DWP would be one half of the membership of the DWP. Participation of any specific member will not be mandatory.

The decision in DWP will be taken with a majority. The project proposed having foreign component/ foreign exchange component of more than 25 per cent of total cost of the project, the case would be referred to the CDWP for consideration after approval of DWP”.

Chief (Energy) MoPD&SI apprised that the proposal of Power Division was examined in the Energy Wing and the following observations were raised: (i) For effective deliberations, there should be senior level representation of Planning Commission and Finance Division in Board of Directors (BoDs) of respective Discos as per Planning Commission instructions ;(ii) representation of Planning Commission and Finance Division be retained as mandatory in light of ECNEC decision of 2004 to oversee any negligence on the part of Discos to avoid violation of guidelines ;(iii) inclusion of senior level presentation from Planning Commission, Finance Division, Power Division, Nepra, Pakistan Engineering Council (PEC) and eminent expert of power distribution sector ( not below the rank of BS 21) may be included in the composition of DWP members;(iv) ex-post facto approval of the previous work is not supported in line with ECNEC’s decision of August 28, 2013 and respective BoDs of Discos may take appropriate disciplinary action as per rules;(v) uniform framework needs to be defined/ adopted by Power Division for processing the self-financed schemes of NTDC and Gencos ;(vii) As per Planning Commission guidelines, detailed feasibility study including load flow studies may be mandatory for all projects having cost more than Rs500million and third party validation ;(viii) if there is any change in scope and cost of the project (more than 15 per cent) then revised PC-1 will be considered by DWP for recommending to their respective BoDs ;(ix) No PC-1 will be considered by DWP/ BoDs without any firm availability of source of financing as per balance sheet of Discos and ;(x) implementation of STG projects by Discos in line with Nepra approved Distribution Integrated Investment Plan (DIPP) along with financing arrangement, be ensured by Power Division.

Secretary Power stated that Power Division supports the proposal of Member (Energy), Planning Commission. Independent BoDs of Discos may fully be empowered to approve self-financed projects of Discos on the pattern of SSGCL & SNGPL.

They should also be held accountable for their decisions. He further stated that the proposal is in line with the policy decisions and BoDs of Discos are being fully empowered in line with the policy.

Secretary Power also requested the Chair that NTDC may also be included in the proposal for approving their self-financed schemes through their BoDs, along with Discos. He added that both NTDC and Discos should seek approval of CDWP for donor-assisted projects.

The Deputy Chairman Planning Commission remarked that the empowerment of independent BoDs of corporate entities is an essential requirement for development of these companies. However, he emphasized that independence and appointment of qualified BoDs on merit must be ensured by Power Division.

He further suggested to Power Division that BoD composition may be revisited to include appropriate public sector institutional representation including Finance Division, Planning Division and from other relevant agencies at senior level. As per current practice in other entities, Planning and Finance are usually part of the BoD.

He further stated that self-financed programs of public sector entities are actually public sector investments and should be part of the Public Sector Development Programme (PSDP), irrespective of their financing source. They should be directed to work on a mechanism to include them in future PSDP by separately mentioning that these are self-financed schemes approved by autonomous bodies. He also stressed upon the need for standardization, improvement in procurement process and contacting models for Discos.

After detailed discussion, it was decided that independent BoDs of concerned Discos, Gencos and NTDC will be fully empowered to approve their self-financed projects on the pattern of SSGCL and SNGPL, except for projects which require government budgetary support, donors funding and GoP’s guarantee. The concerned BoDs of Discos and NTDC shall be held accountable for their decisions for approval of self-financed projects.

Power Division will revisit the present composition of Boards of Discos, NTDC and Gencos to have appropriate public sector institutional representation including Finance Division, Planning Division and other relevant agencies.

Investment plan/ roadmap of Discos, NTDC and Gencos will be presented to CDWP by Power Division for regular update.

The sources said MoPD&SI will work on a mechanism of inclusion of self-financed schemes being undertaken by autonomous SoEs in the future PSDP programs including power sector entities.

Copyright Business Recorder, 2021

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