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ISLAMABAD:
The federal government has barred the current Board of Directors (BoD) of Sui Southern Gas Company (SSGC) from appointing a new Managing Director or filling senior positions. The responsibility for such appointments has been transferred to the incoming board.
According to a letter available with The Express Tribune, the Petroleum Division has instructed the company secretary to hold elections promptly for the formation of a new board of directors.
The Petroleum Division stated that the current BoD has already completed its term, and vacant director seats remain unfilled. Consequently, it is advised that crucial strategic decisions affecting the company’s future be deferred to the new BoD. The letter underscores the need for continuity in the present management, including the incumbent managing director. While the current board can initiate hiring processes, any new appointments or changes at senior management positions should only be decided by the incoming board.
The elections for the BoD of SSGC were initially scheduled for October 23, 2023 but were postponed for six weeks on the advice of the Ministry of Energy (Petroleum Division). Subsequently, the Board sought approval from SECP, extending the election date until December 4, 2023. However, the elections were not held within the stipulated time and have been postponed for the fourth time until March 4, 2024. The delay coincides with critical challenges faced by SSGC, including a legal dispute with Karachi industrialists over a gas price increase announced in November 2023.
The Petroleum Division expressed concerns that this legal challenge could result in serious cash flow issues for SSGC, undermining the meeting of critical revenue requirements committed under the Stand-By Agreement with the International Monetary Fund. The company is also grappling with winter load management issues that demand constant management and expert handling. Additionally, a gas-related revenue shortfall in Balochistan may further impact revenue requirements. Given that the current Board’s term has already expired, the Petroleum Division stressed the urgency of holding elections.
During the tenure of the Pakistan Democratic Movement government, names for the chairman and directors of SSGC and SNGPL had been finalised. However, the current board has repeatedly postponed the election of a new board since October 2022. While the government appointed the chairman and directors of the SNGPL board, the existing SSGC board managed to secure a fourth extension in its tenure rather than conducting elections for a new BoD.
A spokesperson from the Petroleum Division, when contacted, stated that extensions to the SSGC board were granted as per the law by SECP. He mentioned that the names for the new boards had been forwarded to the company, adding that the tenure of the current managing director was set to expire in February, with the fourth extension in the SSGC board tenure expiring in March this year.
Queries were sent to SECP, but the regulator did not respond.
Over the past four years, SSGC, a state-owned entity, has faced significant losses, with last year’s losses reaching around 12 billion, erasing the organisation’s equity, and causing SSGC shares to plunge to their lowest. Reports suggest that the Board has assumed the role of management, resulting in operational challenges.
Read SSGC seeks hike amid Rs47b shortfall
The Board’s failures include the inability to appoint a permanent managing director for two years, leading to a revolving door of three acting managing directors (DMDs). All candidates for MD, including Taha Siddiqui (who was later hired by Pakistan State Oil, were rejected by the Board. Imran Maniar, an overseas Pakistani, was hired as MD in 2021, but his powers were curtailed by placing the policies and procedures of SSGC under review, delaying all decisions on promotions and placements.
Allegations of poor corporate governance led to the resignation of the former company secretary. Instead of hiring a new company secretary, the Board continued with a junior officer of the board secretariat. Without due process, he was appointed as company secretary, promoted to DGM, and had his salary increased from Rs375,000 to Rs1,400,000, raising concerns about a conflict of interest as he was also given the charge of head of Human Resources.
Board members who raised concerns were reportedly shunned and coerced to resign. Nida Farid was the first to resign, followed by Faisal Bengali, who openly alleged that the chairperson tampered with the minutes. A favoured Board member, Sohail Razi Khan, is a candidate for the position of DMD, and his appointment is reportedly in the advanced stage of approval.
When contacted, the chairperson of the SSGC board regarding the extensions, the company responded that elections are conducted based on advice from the Ministry of Energy (MOE), and all such extensions were obtained by the company secretary as per MOE advice and allowed by SECP. Regarding the hiring of managing directors, the company stated that the hiring process is carried out according to established guidelines and frameworks (Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015, Companies Act, 2017, SOEs Act, 2023, SOEs Ownership and Management Policy – 2023 and Corporate Governance Framework) prevalent in the country. However, during any period between the hiring of a permanent MD and the outgoing MD, the position is temporarily filled by one of the DMDs.
Regarding the curtailment of powers of the current managing director and the intervention of the board, the company stated that the Board initiated HR reforms well before the joining of the current MD, and over time, a new HR Manual was developed and put into effect. The BOD is a strategic and policy-making body that takes policy decisions.
Published in The Express Tribune, January 16th, 2024.
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