Controversial SOE bill clears Senate amid protests

• Opposition senators stage walkout
• Dar assures any privatisation transaction without due process to be blocked at cabinet level
• Ali Zafar says govt aims to privatise profit-making institutions by undervaluing assets

ISLAMABAD: In a move criticised by the opposition as an attempt to sell public sector entities at throwaway prices, the Senate on Friday passed the State-Owned Enterprises (Governance and Operations) Amendment Bill, 2024, amid a walkout by opposition lawmakers.

The amendment, empowering the government to remove members on the boards of directors of SOEs upon recommendation by the board nomination committee, was presented in the House by Minister for Law and Justice Azam Nazeer Tarar on behalf of the finance minister.

Mr Tarar said the amendment aimed to enhance the efficiency of the boards of directors of all SOEs and ensure good governance. Under the new law, future board directors would undergo performance evaluations by the nomination committee. Recommendations for removal would be sent to the federal government for approval.

The bill also empowers the government to nominate independent directors through an institutionalised mechanism, besides security of tenure, removal criteria, enhanced board independence, and the appointment of chief executive officers on the boards’ recommendations.

PTI’s parliamentary leader in the House, Barrister Syed Ali Zafar, was the first to object, alleging an ulterior motive behind the bill. He argued that the law, if passed in its current form, would undermine the three-year term security of the SOE board of directors, a fundamental principle of corporate governance.

He claimed that the government intended to remove board members without issuing show-cause notices and replace them with favourites, aiming to privatise some profit-making institutions by undervaluing their assets. “This is the design behind the move,” he remarked.

In response, Law Minister Tarar insisted that the appointing authority always holds the power to remove board members and that the amendment was intended to streamline processes and enhance the efficiency of SOE boards. He emphasised that laws must evolve and that the parliament had the right to amend them as necessary.

He said the proposed amendment was not in conflict with the Constitution and the aims and objectives of the act.

Leader of the House in the Senate, Ishaq Dar, assured that the privatisation process would be transparent and follow due process. “As chairman of the Cabinet Committee on Privatisation, I will ensure transparency and adherence to due process,” he said, adding that any transaction lacking these elements would be blocked at the committee level. He said the privatisation process was the government’s responsibility, which will be discharged.

Referring to the Supreme Court’s June 2006 decision to annul the sale of Pakistan Steel Mills (PSM) to a three-party consortium, Mr Dar also proposed forming a special committee to investigate why the privatisation of Pakistan Steel Mills failed, resulting in hundreds of billions of financial losses. He criticised the previous privatisation attempts, including the sale of PTCL during Gen Musharraf’s tenure, which left Pakistan owed over $800m by Etisalat.

‘PML-N, PPP to blame’

Leader of the Opposition, Syed Shibli Faraz, echoed Mr Dar’s sentiments, blaming previous PPP and PML-N governments for multiple crises.

“Under whose watch did this destruction and deterioration happen?” Mr Faraz said, blaming the two ruling parties for all the mess. He also accused the two parties of making controversial agreements with independent power producers, burdening the masses with costly electricity.

Mr Faraz also alleged that Power Minister Awais Ahmad Khan Leghari appointed his brother Jamal Leghari as chairman of the board of directors in Multan Electric Supply Company (Mepco). He said the country had virtually gone bankrupt because of the power sector’s circular debt and pensions.

The opposition members walked out in protest against the controversial bill, which was passed “unanimously” in their absence through a voice vote.

Towards the end of the session, some PPP senators commemorated July 5, 1977, as a black day in Pakistan’s history, marking the ousting of prime minister Zulfikar Ali Bhutto’s elected government. The House was later prorogued indefinitely.

Published in Dawn, July 6th, 2024