The government announced that all defence goods production-related entities exempted from SOE Act. This Act, enacted to enhance governance and transparency in public sector companies, was a crucial condition set by the International Monetary Fund (IMF). The exemption reflects a significant policy shift concerning the oversight of these entities, which play a vital role in national security.
The Cabinet Committee on State-owned Enterprises (CCoSOEs), chaired by Finance Minister Muhammad Aurangzeb, designated ten more companies as strategic. Notably, the dormant Pakistan Post Office Department was surprisingly included in this classification.
The Ministry of Defence Production had previously proposed that its six entities—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)—be excluded from the SOE Act and the SOE Policy.
These entities are deemed strategic as they contribute significantly to national security and defence-related production. The finance ministry noted that the Ministry of Defence Production maintains oversight on these entities, ensuring budget control and audit compliance. Importantly, while POF, HIT, and PAC are funded by taxpayers, NRTC, TIP, and KS&EW operate as self-sustained entities. All six organizations have been profitable, underscoring their economic viability.
Despite concerns regarding the performance of bureaucrats, the finance minister approved the appointment of retired officials to lead the boards of three key power sector companies. The Ministry of Energy proposed the reconstitution of the boards for the Central Power Purchasing Agency Guarantee Ltd (CPPA-G), Power Planning and Monitoring Company (PPMC), and Power Information Technology Company (PITC). The appointments included former power secretary Irfan Ali as chairman of CPPA-G, alongside several independent directors.
In terms of hydropower, the Water and Power Development Authority (Wapda) was also recognized as an essential SOE. Wapda’s proposal highlighted its capabilities in managing dams, canals, and hydroelectric power projects, which aligns with the government’s focus on maintaining control over critical infrastructure.
The government’s focus on enhancing governance extends beyond the defence sector. The National Highway Authority (NHA) was categorized as an essential SOE, acknowledging its critical role in implementing government policies with significant socio-economic impacts. Similarly, the Ministry of Communications proposed that the Pakistan Post Office Department be designated as a strategic and essential SOE under the SOE Policy 2023.
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However, the committee has yet to decide on the status of Pakistan Railways within the privatization programme, as it remains a non-corporate entity outside the scope of the SOE Act. In summary, the government’s decision to exempt defence entities from the SOE Act signals a strategic prioritization of national security and defense production, while also indicating a commitment to restructuring governance within the power sector.
