Pakistan can face serious consequences like it suffered in the Karkey power project case if the military-run Special Communication Organization (SCO) is allowed to operate on commercial basis in violation of shareholder agreement throughout the country. This was stated by the Legal Wing of the Ministry of Information Technology and Telecommunication while briefing a parliamentary panel here on Friday.
The Ministry of Law and Justice backed the military-run SCO, saying that Competition Act 2010 and the Telecom Re-organization Act 1996 do not bar it from operating on commercial basis throughout the country. However, the Ministry of Information Technology and Telecommunication has disputed the Law Division opinion, saying that it would be a violation of shareholder agreement with Etisalat and the government of Pakistan can face serious financial consequences, like it suffered in the Karkey power project case, and it will also have severe repercussions for the overall telecom sector.
The matter has now been referred to the attorney general of Pakistan for seeking his view and in case his view conflicts with that of the Ministry of IT&T, the matter would be sent to the Prime Minister who could take it in the cabinet. This was revealed in the Senate Sub-Committee on Delegated Legislation which met here with Daud Khan Achakzai in the chair on Friday.
The amendments proposed by the SCO to enhance operations throughout Pakistan were principally disagreed by the Ministry of Information Technology for being against the stated policy of the government, international commitments and other commercial agreements in the telecom regime.
The IT Ministry informed that as per Rule 14(3) of Rules of Business 1973, this ministry is in the process of seeking advice of the AG through the Law Ministry.
An official of the Ministry of Law and Justice said that the IT&T Ministry has sought legal advice of this division whether any extension in the SCO licence to operate in Pakistan beyond Azad Jammu & Kashmir and Gilgit-Baltistan (northern area) would be a violation of the Shareholders Agreement or otherwise. The matter has been examined and it is submitted that the Shareholders Agreement was executed between the federal government and M/s Etisalat in respect of the privatisation of the PTCL in March 2006.
Under Section 39 of Pakistan Telecommunication (Re-organization) Act, 1996, a licence to the PTCL was issued by the Pakistan Telecommunication Authority (PTA) in order to provide telecom services within Pakistan excluding northern areas and Azad Jammu & Kashmir, for a period of 25 years. In terms of Section 39 (3), exclusive right of the PTCL to provide telecom services within Pakistan was for a period of seven years.
Under Section 40 of the Act ibid the SCO was issued a licence to operate and provide telecom services within the northern areas and Azad Jammu and Kashmir. It is important to point out that Section 40 of the Act ibid in fact reiterates and reinforces SCO's right to operate in the northern areas and Azad Jammu & Kashmir, to the exclusion of all other operators. However, the said provision cannot be interpreted as imposing a bar upon SCO to operate in Pakistan.
The Ministry of IT is of the view that LDI licence to SCO to operate within Pakistan cannot be granted in light of the agreement. The relevant Clause 10.2 of the agreement reads as follows: "GoP covenants with the investor that it shall not be concerned directly with any business in Pakistan which is competitive with or likely to be competitive with the business then carried on by the company provided that this restriction shall not apply to National Teleco-mmunication Cooperation ration or Special Communications Organization to the extent of the business carried on by those businesses at the date of this agreement." The agreement containing clause 10.2 was executed when the SCO was already in existence and operation.
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