Warnings that govt contracts awarded directly to state firms could create more PIAs have come from the Pakistan Telecommunication Access Providers Association (PTAPA), which represents 26 companies including Cybernet, Nayatel, PTCL, Wateen, and Multinet.
PTAPA President Dr Shahid Farooq has written to Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal, and IT and Telecom Minister Shaza Fatima Khawaja, demanding the removal of Clause 42(f) of the Public Procurement Rules 2004.
What the Disputed Clause Allows
Clause 42(f) currently allows state-owned enterprises to receive government contracts directly, without going through competitive bidding. PTAPA argues this effectively shields SOEs from the market discipline that private companies face, while giving them privileged access to lucrative government work.
In its letter, the association warned that expanding direct-award contracts to SOEs could weaken the private sector over time and eventually produce more loss-making entities along the lines of PIA, Pakistan Steel Mills, and the country’s power distribution companies (DISCOs), all of which have required significant public subsidies or bailouts in the past.
Industry’s Core Concerns
PTAPA’s letter lists several consequences it expects if the clause remains in place: reduced competition in the telecom infrastructure market, a weaker incentive for efficiency among state enterprises that no longer need to compete for contracts, discouraged investment in research and development by private firms facing an uneven playing field, and the risk of SOEs subcontracting work privately without any competitive bidding of their own.
The association frames this as fundamentally unfair to private telecom infrastructure providers, who must bid competitively for the same government work that SOEs could receive automatically under the existing clause.
Part of a Broader Procurement Debate
The telecom industry’s complaint lands alongside separate pressure from the IMF, which has also pushed Pakistan to limit direct contract awards to state-owned enterprises as part of a broader overhaul of the country’s public procurement rules. Whether Clause 42(f) survives in its current form will likely depend on how that larger negotiation between Islamabad and the IMF plays out in the coming months. PTAPA members are separately warning that rising infrastructure fees could push internet package prices higher for consumers.
Why Telecom Firms Fear Govt Contracts Could Create More PIAs
PTAPA’s warning that govt contracts could create more PIAs is rooted in a simple argument: when state-owned companies can win work without competing, they lose the pressure to perform efficiently, eventually becoming a drain on public finances rather than a functioning business, much like PIA itself.
The association wants policymakers to treat this as a preventable outcome rather than an inevitable one, by closing the procurement loophole before more state enterprises follow the same trajectory as PIA, Pakistan Steel Mills, and the country’s power distribution companies.