Defence firms exempt from SOE law

The government on Thursday exempted all defence goods production-related entities from the purview of an Act of parliament, which had been enacted to improve governance and bring transparency to the affairs of public sector companies under an International Monetary Fund (IMF) condition.

It appointed three retired bureaucrats as chairmen of the boards of power sector companies, indicating the lack of intention to improve the affairs of such companies.

Headed by Finance Minister Muhammad Aurangzeb, the Cabinet Committee on State-owned Enterprises (CCoSOEs) declared 10 more companies as strategic and surprisingly included the dormant Pakistan Post Office Department.

The Ministry of Defence Production had proposed that its six entities should be excluded from the purview of State-Owned Enterprises Act 2023 and SOEs Policy. The Act and the policy had been formulated as part of the IMF's conditions to bring transparency and improve governance in public sector firms.

The Ministry of Defence Production keeps a check on the six entities and is responsible for budget control and audit, the CCoSOEs was informed. These entities are strategic in nature and are responsible for national security and defence-related production.

A finance ministry statement said that the Ministry of Defence Production submitted a proposal regarding categorising the defence production establishments as strategic. It said that the establishments included Pakistan Ordnance Factories (POF), Heavy Industries Taxila (HIT), Pakistan Aeronautical Complex (PAC), Karachi Shipyard & Engineering Works (KS&EW), National Radio Telecommunication Corporation (NRTC) and Telephone Industries of Pakistan (TIP). They are engaged in national security and defence-related activities, which fulfill operational requirements of the armed forces, according to the Ministry of Finance. The proposal was approved for submission to the cabinet for final approval.

POF, HIT and PAC are funded by taxpayers while NRTC, TIP and KS&EW are self-sustained entities. POF, HIT and PAC have been established under an Act of parliament but NRTC, TIP and KS&EW work under the Companies Act. All these companies are profitable.

Despite his reservations about the performance of bureaucracy, the finance minister approved a proposal for appointing retired bureaucrats as heads of the boards of three power sector companies, including the entity that takes electricity supply from all power generation firms. According to the finance ministry statement, the Ministry of Energy presented a proposal for the reconstitution of the boards of directors of Central Power Purchasing Agency Guarantee Ltd (CPPA-G), Power Planning and Monitoring Company (PPMC) and Power Information Technology Company (PITC). The proposal included the nomination of independent directors, ex-officio directors and chairman of each of these boards. After consideration, the CCoSOEs approved the nominations, reconstituting the boards of CPPA-G, PPMC and PITC. The government approved the appointment of former power secretary Irfan Ali as the chairman of CPPA-G. It appointed Meena Suhail, Raheel Ijaz, Ghiyassuddin and Jalal Ahsan as independent directors on the board of CPPA-G, which buys electricity from power plants.

The government appointed Jamal Nasir, another retired bureaucrat, as the chairman of PPMC. Its members included Fuad Imran Khan, Sardar Naufil Mahmud, Khalid Masood and Zainub Janjua.

In addition, former railways secretary Habibur Rehman Gilani was appointed the chairman of PITC while Sardar Naufil Mahmud, Syed Sajjad Ahmed and Fatima Asad were posted as its independent directors. The Shehbaz Sharif government has already appointed a retired bureaucrat as the chairman of four power distribution companies. The Ministry of Communications presented a proposal about categorising the National Highway Authority (NHA) as an essential SOE under paragraph 9 of the SOE Policy 2023.

Due to the NHA's involvement and its critical role in implementing government policies with significant security, social and economic impacts, the committee approved the proposal, categorising the NHA as an essential SOE.

The Ministry of Communications also proposed the categorisation of Pakistan Post Office Department (PPOD) as a strategic and essential SOE under paragraph 9 of the SOE (Ownership and Management) Policy 2023. The proposal was reviewed in light of the justifications presented by the Ministry of Communications and was approved by the CCoSOEs. The Post Office board remains incomplete due to the examination of candidates' credentials by the intelligence agencies.

The Ministry of Water Resources submitted a proposal to categorise the Water and Power Development Authority (Wapda) as strategic, which after deliberation, was also declared an essential SOE. It was directed that Wapda aligns its governing Act in consonance with the SOE Act, said the finance ministry.

Wapda pleaded that it had the requisite capability, competence and experience for the design, construction, operation and maintenance of dams, canals and hydroelectric power projects and may be retained in the public sector.

However, the committee did not take any decision on removing Pakistan Railways from the privatisation programme.

The SOE Act is applicable only to the corporate bodies but Pakistan Railways is a non-corporate body, according to the railways secretary.