Wednesday, September 22, 2021

Why has Kulman Ghising been reappointed at the NEA?

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First, a disclaimer: Besides what is being reported in the media, this scribe has no previous knowledge and information about Kulman Ghising, nor any relation or interaction with him.

Ghising is credited for successfully turning around financially loss-making state-owned enterprise like Nepal Electricity Authority (NEA) into a profit-making one. The public, especially, the Kathmanduites remember him for freeing them from long hours of load shedding that often used to drag into 18 hours a day. Probably because of this successful track record, social media in Nepal has projected him or rather idolized him as a superman and demanded for his second term appointment. But this fell into the deaf ears of Oli Government.

Some others have demanded him to be appointed in other sick public sector units so that he may repeat his feat there. Some even suggested him to join politics. In a way, he is treated as a national hero. 

The new government has appointed Ghising as the Managing Director of the NEA for the second four-year term. It is not yet clear why Deuba Government has decided to re-appoint Ghising. Is it to fulfil public demand? Or there is some definite agenda like improving NEA performance? Or is it a reward for his earlier outstanding feats? Or a vendetta against the Oli Government?

There is rumour that the ousted MD Hitendra Dev Shakya is preparing to wage legal battle over this unceremonious transfer to vacate the seat for Ghising. If this is true, it will be an unfortunate event that will further politicize already battered leadership positions in many of our public enterprises.

In a way, it will be interesting to watch Ghising’s performance during his second term. There are four reasons behind this. First, he has to break his own record. This will be extremely challenging. Similar to the game of sport, it is too difficult for a sportsman to overcome his own record. Second, there is no guarantee that he will be able to repeat the same feat during the second term. The environment (whatever you like to call it) that he faced during the first term has changed dramatically. It is very much uncertain that he will be able to produce the same result in the changed environment. Third, as an MP from the Maoist Camp reverberated inside the parliament, “What will the government do when Ghising gets old?” The implied meaning here is his indispensability and the absence of alternative choices. Fourth, if his reappointment has come as a public demand, this will leave (bad) precedence in the appointment of CEOs in public institutions.

Leadership theories abound in the performance of CEOs in public enterprises. They range from “profit maximizers” to “social entrepreneurs”; from “don’t rock the boat, go with the flow” to “intransigent leaders” constantly fighting with the politicians. Heading a public enterprise is different from heading a private sector enterprise. One has to constantly joggle between “public” or social aspects and “enterprise” or commercial interests.

What is the job of the NEA? Is it for electrification or making money? Giving jobs or improving quality of electricity? It is shocking to read some civil society members praising Ghising for turning around NEA purely on financial grounds when large part of public investments have to be made beyond financial or market considerations. If this is not true, Arthur Cecil Pigou, a renowned British economist, will not have advocated roads and bridges to be constructed by the public sector and their use be made toll free. “Public goods” are different from “private goods”.

There is one absurd theory which says it is better for a survival instinct CEOs of public enterprises to make losses, if possible even huge losses. The reasoning goes like this: Loss making units are outside the radar of hungry politicians looking for jobs, contracts and advertisements to their near and dear ones. The implied meaning here is to avoid political interference. No one will bother to have their interest in loss making units. The more one makes losses, the more subsidies can be demanded from the artha mantralaya (Finance Ministry). Instead, if you turn around a sick unit, it will invite your transfer to other sick units expecting you to replicate your magic wand there. In a way, one is risking his/her career. Therefore, it is better not to rock the boat and go with the flow.

As many CEOs in the public enterprises are appointed based on their political affiliations; the very objective of these “political managers” are to obey the directives and instructions of their hakims in the Singhadurbar. They are content and happy distributing jobs, contracts and largesse to the relatives and friends of their political masters. As a CEO has been appointed to pursue political goals, their performance is measured in terms of achievement or non-achievement of avid political goals.

The political expediency might have pushed Deuba Government to appoint Ghising as the CEO of NEA for the second term; definitely, it does not bode well for the overall management of public enterprises in Nepal. In the absence of definite reasons behind his reappointment, the public enterprise sector that is already in disrepute, more chaos and mismanagement can be observed. Since we are not in a position to make policy decisions, at this stage, we can just wish Ghising a success for his second term appointment.

Published on 15 August 2021

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