Power Division's move to impose control on PLCs may foil govt's reform goal in power sector
Monday, 14 June 2010
A move by the Power Ministry to impose control over the newly created state-owned corporate entities in the power sector may foil the government's long-cherished reform goals, reports UNB.
According to official sources, the Power Division in April this year created a consultative committee to monitor, control and oversee the activities of the 10 state-owned public limited companies (PLCs).
The committee, in a meeting, presided over by the state minister for power and energy, decided that either the secretary or additional secretary of the Power Division will be the chairman of each of the PLCs.
Similarly, the PLCs will have to consult with the consultative body prior to taking any decision regarding different issues like pay and perks, manpower recruitment, promotion, extension of agreement and house rent fixation.
This decision invoked a huge frustration among the operating boards of the PLCs as they think this would immensely curtail their independence in running the organisations in a commercial manner.
Under a power sector reform programme, supported by the donor agencies, the government, by dividing the Power Development Board (PDB) and the defunct Dhaka Electric Supply Authority (DESA), created a number of public limited companies (PLCs).
The PLCs include the Power Grid Companies of Bangladesh (PGCB), Dhaka Power Supply Company Ltd (DESCO), Dhaka Power Distribution Company Ltd (DPDC), Electricity Generation Company of Bangladesh (EGCB), Ashuganj Power Station Company Ltd (APSC), North-West Power Generation Company Ltd (NWPGC) and the West Zone Power Distribution Company Ltd (WZPDCL).
All these PLCs were registered with the Registrar of the Joint Stock Companies and Firms under the Companies Act 1994.
The main objective behind the creation of these PLCs was to turn them into corporations in the power sector with the goals of reducing the systems loss, increasing revenue collection, making the PLCs independent, vibrant, profitable and truly commercial organisations.
The PLCs were registered under the Companies Act giving the autonomy to take their own decision independently. Elimination of bureaucracy in the decision making process was another goal in creating the PLCs in power sector.
As part of these goals, shares of PGCB and DESCO were floated to the public through direct enlistment in the stock markets to gradually introduce the private sector management.
From that perspective, so far, all these PLCs have been running by their own independent management and board of directors. Within a short span of time, significant improvement appeared in performances and services of the PLCs.
For instance, DESCO's systems loss came down to around 10 from 45 percent in last 14 years while PGCB set an example in reducing its systems loss and making profits while PDB's systems loss still hovers at more than 20 percent.
As a result, when the shares of DESCO and PGCB were offloaded to the public through stock market, they received huge response from the investors and became 'blue-chips' within a few months. Now, they are the hot cakes in the share market.
Such tremendous results prompted the government to create more PLCs in the power sector. As a result, EGCB, DPDC and other PLCs were created by the government later.
But now, these PLCs became frightened to receive the new order and control mechanism of the Power Division. The Power Division asked the PLCs to consult the ministry's consultative body prior to taking any decision regarding management operation.
According to official sources, the Power Division in April this year created a consultative committee to monitor, control and oversee the activities of the 10 state-owned public limited companies (PLCs).
The committee, in a meeting, presided over by the state minister for power and energy, decided that either the secretary or additional secretary of the Power Division will be the chairman of each of the PLCs.
Similarly, the PLCs will have to consult with the consultative body prior to taking any decision regarding different issues like pay and perks, manpower recruitment, promotion, extension of agreement and house rent fixation.
This decision invoked a huge frustration among the operating boards of the PLCs as they think this would immensely curtail their independence in running the organisations in a commercial manner.
Under a power sector reform programme, supported by the donor agencies, the government, by dividing the Power Development Board (PDB) and the defunct Dhaka Electric Supply Authority (DESA), created a number of public limited companies (PLCs).
The PLCs include the Power Grid Companies of Bangladesh (PGCB), Dhaka Power Supply Company Ltd (DESCO), Dhaka Power Distribution Company Ltd (DPDC), Electricity Generation Company of Bangladesh (EGCB), Ashuganj Power Station Company Ltd (APSC), North-West Power Generation Company Ltd (NWPGC) and the West Zone Power Distribution Company Ltd (WZPDCL).
All these PLCs were registered with the Registrar of the Joint Stock Companies and Firms under the Companies Act 1994.
The main objective behind the creation of these PLCs was to turn them into corporations in the power sector with the goals of reducing the systems loss, increasing revenue collection, making the PLCs independent, vibrant, profitable and truly commercial organisations.
The PLCs were registered under the Companies Act giving the autonomy to take their own decision independently. Elimination of bureaucracy in the decision making process was another goal in creating the PLCs in power sector.
As part of these goals, shares of PGCB and DESCO were floated to the public through direct enlistment in the stock markets to gradually introduce the private sector management.
From that perspective, so far, all these PLCs have been running by their own independent management and board of directors. Within a short span of time, significant improvement appeared in performances and services of the PLCs.
For instance, DESCO's systems loss came down to around 10 from 45 percent in last 14 years while PGCB set an example in reducing its systems loss and making profits while PDB's systems loss still hovers at more than 20 percent.
As a result, when the shares of DESCO and PGCB were offloaded to the public through stock market, they received huge response from the investors and became 'blue-chips' within a few months. Now, they are the hot cakes in the share market.
Such tremendous results prompted the government to create more PLCs in the power sector. As a result, EGCB, DPDC and other PLCs were created by the government later.
But now, these PLCs became frightened to receive the new order and control mechanism of the Power Division. The Power Division asked the PLCs to consult the ministry's consultative body prior to taking any decision regarding management operation.