PEs reform in jeopardy as Board loses authority to select board chairman, directors
KATHMANDU, Dec 17: The government has curtailed key responsibilities of the Public Enterprises Board, in a setback that is likely to impede the ambitious plan of launching reforms at state-owned enterprises.
The Council of Ministers recently decided to strip the Board of its authority to initiate selection process of board chairman and directors at state-owned enterprises, in a rollback on plans to make public enterprises more competitive and efficient.
“This decision to cut back on responsibilities of the Board will have wide ranging impact on overall development of public enterprises, as it will once again turn state-owned enterprises into a playground for politicians to appoint any Tom, Dick and Harry to those posts,” Senior Economist Prof Dr Bishwambar Pyakurel told Republica, calling the move an attempt to humiliate officials of the Board, which constitutes some of the most experienced and credible individuals.
The Board, set up earlier this year and led by former secretary Bimal Wagle, currently has the authority to lay recommendation for appointment of chief executive, board chairman and board director at public enterprises through open competition.
For this, it used to publicly call candidates to apply for the post and shortlist names of three qualified individuals based on experience, academic qualification, business plan submitted by them and face-to-face interview, among others. Based on the recommendation made by the Board, the government used to appoint a person to the vacant post.
Although the latest Council of Ministers decision means the Board still holds the authority to lay recommendation for appointment of chief executives, it is said the chief executive alone cannot implement reforms in a company without presence of reform-minded individuals at the board of directors.
“Since the recent decision means the government has opened the back door for politicians to appoint whoever they want to the posts of board chairman and director, we cannot expect competitive people to come on board and complete their tenure,” Pyakurel said. “Without backing of a strong board of directors, a public enterprise definitely cannot raise its efficiency and competitiveness.”
The latest government move, according to Pyakurel, has also raised question on relevance of forming the Board, which was supposed to eventually look over every activity of all public enterprises, which despite receiving billions of rupees from the government have turned into liabilities for the state because of unnecessary political intervention, overstaffing, inefficient management and incompetent board of directors.
“If this practice continues, no qualified people would be interested toin join the Board, which will put another question mark on credibility and trustworthiness of the incumbent government,” Pyakurel said.