Pakistani Army invests in oil business


From controlling major business ventures in the state, the Pakistani Army is now investing in the oil business.

According to a report ‘Pakistani Army moves into the oil business’ authored by FM Shakil in the Asia Times stated that the recent growth of businesses controlled by the powerful army has been impressive.

The report stated that in 2016, the Pakistan Senate was informed that the army’s commercial wings, including the Fauji (Army) Foundation, the Shaheen Foundation, the Bahria Foundation, the Army Welfare Trust and the Defense Housing Authorities, owned as many as 50 business concerns and housing property worth over 20 billion USD.

However, three years later, the number of ventures owned by the army is in hundreds with net investment reportedly exceeding 100 billion USD.

“The latest expansion of army business is a move into the oil sector. It is in addition to dozens of businesses the military already runs in Pakistan including companies in the spheres of banking, food, retail superstores, cement, real estate, housing, construction, private security services, and insurance,” wrote Shakil in his report.

Asia Times quoted Dr Ayesha Siddiqa, who is a Pakistani military scientist and author of the acclaimed book ‘Military Inc.’ as saying, “The army’s total stake in private businesses in the country is more than $100 billion. They are underestimating their investment and disguising their involvement through public sector organizations like (the) National Logistic Cell, Special Communications Organization and Frontier Works Organization, which are exempt from annual audit and scrutiny.”

Siddiqa also revealed that the Fauji (Army) Foundation was one of the leading military-business conglomerates in Pakistan. She further divulged that in 2005, the elected parliament was affronted by Pakistan’s Ministry of Defense after it questioned a controversial business transaction that undersold sugar mills.

Siddiqa, who is also a research associate at the SOAS South Asia Institute, University of London revealed that ‘Milbus-related’ resources do not follow the norms of accountability prescribed for government institutions, reported Asia Times.

She further asserted that military involvement in socio-economic activities undermines professional competence by focusing on non-military commercial activities instead of devoting themselves to core military duties and responsibilities.

The Frontier Oil Company (FOC) is a subsidiary of the army-managed Frontier Works Organization (FWO), which has now been granted a contract for the construction of a 470km-long oil pipeline estimated to cost 370 million USD.

“Ironically, the Economic Coordination Committee (ECC), which granted the contract to the FOC in mid-February, violated its own decision made in April last year. The then prime minister Shahid Khaqan Abbasi had approved the granting of the contract for the white oil pipeline to the government entity Inter-State Gas System (ISGS). The former government of Abbasi was of the view that since ISGS was already involved in the execution of the proposed TAPI and North-South pipelines, they should have no difficulties in the execution of Machike-Taru Jabba High-Speed Diesel and Motor Spirit pipeline,” Shakil asserted in his report published in Asia Times.

Asia Times quoted an official of the state-run ISGS upon the condition of anonymity as saying that ECC failed to honour the decision of the previous government that awarded the pipeline contract to ISGS.

Pointing out that Oil & Gas Regulatory Authority (OGRA) violated the cabinet decision of April last year in which the ECC empowered the federal cabinet to vet and approve the proposals for oil pipeline projects, the official said, “It is strange that OGRA granted a construction license to FOC well before time without informing the previous government, while the ISGS, which is part of the petroleum ministry, is yet to be considered for a license.”

“The previous government had approved the pipeline at a cost of $280 million which is $90 million less than the projection of FOC, but the contract was still awarded to FOC,” he added.

Asia Times quoted Pakistan People’s Party (PPP) Secretary General and former Senator Farhatullah Babar as saying, “The parliamentary proceedings show that all is not well with the manner in which business contracts are awarded to military-run enterprises.”

He also claimed that the lucrative toll collection at motorways was acquired by the Frontier Works Organisation on a long-term basis without inviting bids. Babar asserted that the huge involvement of the army in non-military business activities has attracted the attention of the Parliament as well as that of the Supreme Court.

Babr said, “The military’s institutional strengths and advantages are well known. Backed by these strengths the military commercial wings always use unfair means to compete with other competitors and acquire commercial enterprises and get contracts in a non-transparent manner. Potentially it will have negative consequences for business as a whole because private businesses (are not competing on) a level playing field.”

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