Telecom industry seeks abolition of G2G contracting under PPRA rules

The Telecom Operators Association (TOA) has urged the government to abolish the controversial provision allowing direct government-to-government (G2G) contracting under the Public Procurement Rules, 2004, arguing that the mechanism is crowding out private-sector businesses from IT, telecom and digital services projects.

In a letter addressed to Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal and IT and Telecom Minister Shaza Fatima Khawaja, TOA Secretary General Kamal Ahmed called for repeal of Clause 42(f) of the PPRA Rules, which permits procuring agencies to directly contract state-owned entities for time-sensitive works and services considered to be in the public interest.

The association said federal and provincial governments had strengthened existing state-owned enterprises (SOEs) and established dozens of new entities following the 2021 amendment, with numerous IT and telecom projects allegedly awarded through direct G2G contracting without competitive bidding over the last five years.

“This has severely crowded out the private sector,” TOA maintained, noting that telecom and technology companies had invested billions of rupees in infrastructure and services over the past two decades while making significant contributions to the national exchequer.

According to TOA, the telecom industry is rapidly transforming from traditional infrastructure providers into global digital-services companies, with operators investing heavily in data centres, cloud computing, artificial intelligence and other digital services.

The association argued that a strong domestic technology ecosystem was essential for Pakistani companies seeking to penetrate international markets. However, it said government spending on locally available IT, telecom and digital services was increasingly being diverted towards government-owned companies.

TOA warned that the G2G mechanism was depriving homegrown technology companies of an opportunity to deploy and validate their products in the domestic market before competing internationally.

It also alleged that state-linked entities and preferred G2G contractors could enjoy regulatory exemptions, preferential licensing or implicit government guarantees that private companies could not match, creating an uneven competitive environment.

The association further cautioned that reduced competition could suppress innovation and efficiency, while state-backed contractors may have less incentive to improve their performance.

TOA also raised concerns over job creation, particularly for educated youth, saying that starving small and medium-sized private enterprises of business opportunities would inhibit their growth.

A particularly serious concern raised by the association was the alleged practice of SOEs subcontracting G2G projects to preferred private companies after securing contracts without competitive bidding.

TOA termed this a potential circumvention of transparency and accountability requirements in public procurement.

The association also invoked Prime Minister Shehbaz Sharif’s stated position that there was “no business of government in running a business”, arguing that SOEs were largely established with taxpayers’ money but were subsequently allowed to compete with private businesses while receiving preferential access to government contracts.

TOA has therefore requested the government to repeal Clause 42(f) and require SOEs to compete for government-funded projects on an equal footing with private-sector entities.

“The SOEs should compete in government funded projects just like any private sector entity,” the association said, describing the proposed repeal as being in the broader national interest.

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