By Staff Reporter
ISLAMABAD: Pakistan notified new public procurement rules on Monday, two days before an International Monetary Fund deadline, but the text keeps a route for awarding contracts directly to state-owned enterprises that the lender had wanted curtailed.
The Public Procurement Rules 2026 replace the 2004 framework with immediate effect. They make a digital procurement platform mandatory for federal agencies, add outside oversight of large contracts and tighten penalties for bidders that break the rules. The government notified them to meet an IMF condition, but without ending the preference for government-owned entities in contracts awarded without competitive bidding, despite the lender’s insistence.
The timing coincides with the start of the IMF’s fourth review of Pakistan’s $7 billion Extended Fund Facility. Formal negotiations with the staff mission, led by Iva Petrova, started on Monday, covering the fourth EFF review and the third review of the Resilience Support Facility. The IMF’s resident representative in Pakistan, Mahir Banici, said the talks run alongside the Article IV Consultation. Officials said the mission would stay almost two weeks, into the first week of October.
Two open benchmarks
The procurement rules were due earlier than they arrived. Under the IMF-backed governance action plan, Pakistan was to approve and notify them by June 2026, and a dispute over direct awards to state companies delayed the process. The IMF’s May staff report set a new end-September 2026 benchmark for adopting amendments that eliminate preferences for state entities in awards made without competition, subject to limited and reasonable exceptions.
A second benchmark is already missed. Pakistan is in breach of an end-March 2026 target on amendments to the Sovereign Wealth Fund Act, which would set governance mechanisms and safeguards for seven state-owned enterprises with about $8 billion in assets. The IMF has said the fund’s operationalization stays on hold until those legal changes are enacted. The amendments are awaiting parliamentary approval.
Most of the seven are blue-chip companies listed on the stock exchange that remain outside normal reporting requirements. They are Oil & Gas Development Co., Pakistan Petroleum Ltd., Mari Petroleum Co., National Bank of Pakistan, Govt Holdings, the Pakistan Development Fund and the Neelum-Jhelum hydropower project.
Direct contracting
Under Rule 32, an agency may award works and services directly to state-owned entities through the E-Pak Acquisition and Disposal System, or EPADS, if they are time-sensitive, scattered, remotely located and in the public interest, or urgent. Dawn reported that the rule requires the entity to be eligible and to use its own resources, that competition among eligible bodies must run through limited tendering, and that agencies must test the reasonableness of prices. It also reported a cap on subcontracting at 40% of the work assigned, and an undertaking on EPADS from the agency head.
Local media reported the final Rule 32-F differs from the IMF’s proposal, and that the fund’s suggested conditions, including the 40% subcontracting limit, were not adopted. It also said the rule lists narrower grounds for direct contracting, such as spare parts from the original supplier, protection of exclusive rights, compatibility problems, and repeat orders not exceeding 15% of the original contract. The two accounts couldn’t be reconciled from the reporting, and the gazette text would settle it.
Rule 35 lets agencies restrict bidding to national firms, bar bidders of certain nationalities, or give domestic bidders a preference on works and on goods made, mined or grown in Pakistan. The margin of preference must appear in the bidding documents. Where the rules conflict with an international treaty or agreement, including one with a financial institution, the treaty prevails.
What else changes
The document set public-sector procurement at 20% to 25% of gross domestic product, running to trillions of rupees a year. The main changes:
Oversight: Bids up to 2 billion rupees go to an internal Bid Evaluation Committee, and those above 500 million rupees also face third-party validation. Above 2 billion rupees, an external committee with at least two-thirds of its members from outside the agency opens and evaluates bids.
Platform and planning: All federal procurement must run through EPADS. Agencies must publish annual procurement plans there and on the Public Procurement Regulatory Authority’s website, and must set up procurement cells of accredited officers.
Publication: Procurements above 200,000 rupees go on EPADS and the regulator’s site. Those above 5 million rupees must also run in at least two national dailies, one English and one Urdu. Bid openings above 500 million rupees for goods and services, and 1 billion rupees for works, are to be live-broadcast.
Speed: Minimum response periods are 10 days for national competitive bidding and 20 days for international. A new “gallop tendering” method, for purchases between 700,000 and 2 million rupees, carries a five-day window. Request-for-quotation purchasing is allowed between 200,000 and 700,000 rupees, and shopping without quotations below 200,000.
Frameworks and guarantees: Open framework agreements can run up to three years and closed ones up to one. Bid security is capped at 5% up to 250 million rupees and 2% above. Performance guarantees can’t exceed 10% of contract value.
Penalties: Blacklisting can run up to 10 years for corrupt or fraudulent practices, up to five years for knowingly giving false or misleading eligibility information, and six months for failing to perform a contract. The rules also provide for cross-debarment.
Disclosure and disputes: Records must be kept for at least five years, and evaluation and award documents are to be posted on EPADS after an award, with exceptions for proprietary information and the public interest. Complaints go to grievance committees made up of people from outside the agency, with appeals to a PPRA appellate committee.
Under the IMF program, the regulator has also agreed to publish beneficial ownership information for awarded contracts above 50 million rupees.
Timing and reaction
The federal cabinet approved the rules the previous week on the recommendation of the Cabinet Committee for Disposal of Legislative Cases. The Cabinet Division notified them on Sept. 28. They were made under Section 26 of the PPRA Ordinance 2002, and cases already under way continue under the 2004 rules.
PPRA Managing Director Hasnat Ahmed Qureshi said the rules provide “a modern regulatory framework” intended to strengthen transparency, competition, accountability, efficiency and value for money. He said they add oversight at every stage, from planning and bidding through contract management, performance evaluation and closure.
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