Public Enterprise Board (PEB), which was formed to discourage political appointments at public enterprises, has remained largely defunct for the last three years.

The board was constituted in 2012 by the then government led by Baburam Ram Bhattarai through the Public Enterprises Directorate Board Order. The PEB has been given the right to recommend candidates for chief executives and board members of PEs based on their qualifications, experiences and performances.

Initially, 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 Constituent Assembly election in the same year (which was in fact held a year later).

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.

The court in March 2015 allowed the PEB to conduct its regular work, but the tenure of its chairman Bimal Wagle had already ended in January. The PEB chairman’s post has remained vacant ever since.

According to Finance Ministry officials, no accelerated efforts have been made to make fresh appointment to the top PEB post. “Due to the lack of political commitment for bringing reforms in PEs, the board has remained idle,” said an official.

For the appointment of the PEB chairman, a committee should be formed under the Public Service Commission (PSC) chairperson or a PSC member nominated by him/her to recommend a name to the Cabinet. “We sent a letter to the PSC for the formation of such a committee and also sent another follow-up letter about a month ago, but we have not received a response yet,” said the ministry official.

While the PEB remained leaderless and passive for long, the government removed over a dozen PEs from its purview over the last three years, making political appointments there.

Former PEB chairman Wagle said the government could just take “stop gap measure” such as promoting somebody as acting CEO or making new appointments for a period until the final court decision regarding the PEB’s jurisdiction comes out.

“But ministers took advantage of the situation and removed PEs from under the PEB’s purview so that they could make political appointments,” said Wagle, adding the politicians are more interested in making political appointments and financial gains.

Wagle recollected the instances of pressure he had faced from politicians to change the qualification criteria that the candidates they preferred could be appointed.

Ministers were not happy with the formation of the PEB as it took away their authority over the PEs. Former Finance Secr-etary Rameshore Khanal recalls an incident in which a minister had made a statement that he would not allow a PE chief appointed trough the competitive process to attend the office. “The Minister was firm not to allow the CEO to attend the office after his preferred candidate was disqualified,” said Khanal, who was then an economic advisor to the Prime Minister.

The idea behind the formation of the PEB was to being reforms in PEs, most of which were incurring losses. As of fiscal year 2014-15, 17 out of 37 PEs are incurring losses, according to the Annual Performance Review of PEs 2016 released by the Finance Ministry. In fact, initial preparations were aimed at setting up a holding company and bring all the PEs under it—a model executed in Singapore, where state-owned Tamasek Holding has several PEs under it. “But the concept could not be materialise due to protests from ministries,” said Khanal.

Later the board was formed with limited jurisdiction, largely following the Indian model. “Even after its formation, the PEB was not allowed to work properly,” said Khanal.

However, neighbouring Bhutan took the different route. It set up Druk Holding and Investment Limited in 2007 and brought 20 government-run enterprises under it. “Bhutanese PEs are doing quite well under the holding company,” said Khanal.