The Pakistan Telecommunication Access Providers Association (PTAPA) has warned that expanding direct government contracts for state-owned enterprises (SOEs) could undermine private-sector competition and eventually create more financially troubled public entities.
The association has urged the government to ensure that IT, telecom and digital projects funded by public money are awarded through transparent and competitive procurement, rather than being routinely given to government-owned organisations without open bidding.
PTAPA President Dr Shahid Farooq raised the concerns in a letter addressed to Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal and IT and Telecom Minister Shaza Fatima Khawaja.
PTAPA represents 26 companies, including Cybernet, Nayatel, PTCL, Wateen and Multinet.
PTAPA seeks removal of direct-contracting clause
The association has called for the removal of Clause 42(f) of the Public Procurement Rules 2004, which permits government-owned organisations and state-owned enterprises to enter into contracts directly with other government entities without competitive bidding.
PTAPA argued that the provision has contributed to an increase in the number of IT and telecom projects awarded to SOEs over the past five years.
According to the association, private-sector companies have invested heavily in Pakistan’s telecom infrastructure and digital economy over the past two decades. However, the increasing use of direct government contracts is creating what it considers an uneven competitive environment.
State-owned companies have competitive advantages
PTAPA said SOEs can enjoy advantages that are generally unavailable to private-sector companies, including government support, regulatory concessions and preferential treatment.
The association warned that reduced competition could weaken incentives for organisations to improve operational efficiency, adopt new technologies and increase investment in research and development.
Dr Shahid Farooq argued that organisations operating without adequate competitive pressure can become inefficient over time and may ultimately become financial burdens on the government.
PTAPA cites PIA and Pakistan Steel Mills
The association cited Pakistan International Airlines (PIA), Pakistan Steel Mills and electricity distribution companies as examples of state-owned entities that have faced significant financial and operational challenges.
PTAPA said the experience of such organisations demonstrates the risks of allowing government-backed entities to operate without sufficient market competition.
The association also alleged that some SOEs awarded government projects subsequently subcontract portions of the work to private companies without competitive bidding.
PTAPA said such practices can further reduce transparency and limit opportunities for private-sector firms to compete directly for government-funded projects.
Telecom industry seeks equal competition
The association has called for SOEs and private companies to compete on equal terms for government IT, telecom and digital contracts.
It argued that open procurement would allow government agencies to select service providers based on factors such as price, technical capability, efficiency and quality rather than ownership structure.
PTAPA also warned that excessive reliance on direct contracts could discourage private investment in Pakistan’s digital and telecommunications sectors.
The association believes maintaining competitive procurement would help protect existing private-sector investment while encouraging innovation, technology development and further infrastructure expansion.
PTAPA has therefore urged the government to review the rules governing direct contracts and prevent public-sector procurement policies from crowding out private businesses that contribute to the economy through taxes, employment, investment and infrastructure development.
