ISLAMABAD, Oct 30: The armed forces of Pakistan have opposed the privatisation of the Pakistan State Oil (PSO) for security considerations, and have asked the government to review the decision.

The government has also been informed that security concerns of the armed forces have become all the more valid, especially in view of the reported heightened Indian ingress into Pakistan’s national communication system as a result of PTCL’s privatisation. Similar influences from outside on Pakistan’s POL supply and storage mechanism will create more problems for the country and its war potential, said a government source quoting military authorities as saying, after a meeting at the joint staff headquarters.

The opposition to the sale of strategic assets is perhaps the biggest challenge to the government’s privatisation strategy after the failed sale of the Pakistan Steel Mills that was cancelled by the Supreme Court last year on allegations of impropriety and indecent haste.

Informed sources told Dawn that a recent meeting of the Joint Logistic Planning Committee (JLPC) specifically deliberated on the ‘impact of proposed sale of PSO on armed forces’ on the recommendations of the services headquarters.

The committee concluded that “the PSO should not be privatised” due to a number of reasons, including PSO’s reluctance even before privatisation to renew its existing contracts, which in private hands would be more difficult to be handled. The committee also reminded the government that a lot of security problems had already started arising due to the privatisation of Pakistan Telecommunications Company Limited (PTCL).

Subsequently, the Joint Staff Headquarters, with the approval of the chairman joint chief of staff committee (JCSC) has “strongly recommended that (the) decision to privatise PSO may be reviewed”.

The sources said the armed forces believed that being a strategic asset, a privatised PSO was not in the interest of the armed forces and the country. Secondly, with improved economic and financial health of the country, the government was no more under such financial constraints as it was when the decision to privatise the PSO was taken a few years ago.

The joint staff headquarters have also informed the government that embarkation units of the army and air force have started facing security and administrative problems due to privatisation of a few berths at the port. The problem has been aggravated as the Karachi Port Trust refused to take any responsibility in this regard.

Moreover, PSO even before its privatisation has refused to renew the contract of de-fuelling Pakistan Navy ships and it was feared that the PSO after privatisation would be more likely to default on its obligations despite guarantees provided in the agreement.

The company has announced substantial increase in its profit in the first quarter on the back of rising inventory gains as international prices rose and a new-found market in Balochistan as a result of reduction in smuggling of Iranian petrol.

The NA Committee on Petroleum and Natural Resources in a detailed investigation report has levelled serious allegations of financial and administrative irregularities in the affairs of the PSO over the past six years (January 2000 to July 2006). The committee attributed better financial results of PSO to over 520 per cent rise in the company’s margin increased by the government and inventory gains.