The Cabinet on Thursday scrapped the Public Enterprises Board (PEB) formed in 2012 to end the practice of handpicking chief executives at public enterprises (PEs).

The erstwhile Baburam Bhattarai government in February that year formed the PEB with the mandate of picking PE chief executives from free competition so as to enhance efficiency of public enterprises, several of which are loss-makers.

After keeping the PEB leaderless for two-and-a-half years, the government decided to cut short its life in line with the current fiscal budget which says PEs will be managed under new laws. The PEB was leaderless after its chairman Bimal Wagle completed his four-year tenure in February 2016.

The board was scrapped by the Cabinet as proposed by the Finance Ministry. Uttar Kumar Khatri, chief of the Financial Sector Management and Coordination Division, said they proposed scrapping the board after the budget said that public enterprises would be managed in line with the new laws.

“The proposal of scrapping the PEB was sent in line with the Cabinet decision of July 4 which sought recommendation from the concerned ministry within 15 days if any commission, academy, board, committee or any other institution with similar nature should be scrapped, merged or restructured,” he said.

While the aim was to rid PE chief appointment of political intervention, the board functioned freely hardly for a little more than a year. After the establishment of the board, the government appointed chief executives to 11 public enterprises based on its recommendation after conducting free competition among the candidates.

However, the Election Commission (EC) barred the PEB from continuing its regular work in July 2012 in view of the code of conduct for the planned second Constituent Assembly elections the same year (which was in fact held a year later). In September 2013, the Supreme Court, through an interim order, barred the PEB from issuing vacancy notices and carrying out other works related to appointments at PEs.

Though the apex court did allow the PEB to conduct its regular business in March 2015, the Sushil Koirala government had already started bypassing the board while appointing chief executives. When the court halted PEB’s work, the government started pulling the PEs out of the PEB’s purview and removed almost all of them after it turned leaderless. “As ministers could not appoint their favourites to the PEs under their ministry, they were against the PEB. Thus the board got no help from some ministries,” said former PEB chairman Wagle.

Wagle said that scrapping of the board indicates that the government does not want an independent body to appoint officials at the PEs. “If the government ensures that the chief executives of the PEs are appointed through an even more independent body and in more competitive ways, the decision should be considered good,” he said.

The government has admitted efforts were made to weaken the PEB. Initially, the formation order authorised the PEB to recommend chair and board members of PEs through free competition. This was later limited to appointment of the chief. “This shows different modalities were adopted for appointments of similar nature,” stated the Annual Performance Report-2016 of PEs published by the Finance Ministry.