Privatisation enters new phase; PMDC next in line despite being profitable

ISLAMABAD: The federal government has approved a sweeping restructuring of agencies and state-owned enterprises operating under the Petroleum Division, ordering large scale workforce reductions, closure of departments, and the privatization of several public-sector entities including the profitable Pakistan Mineral Development Corporation (PMDC).

The Cabinet approved the recommendations of the Committee on Rightsizing of the Federal Government (Phases III and IV) through a summary dated March 26, 2026. Subsequently, the cabinet division directed concerned ministries and divisions to submit implementation plans, with most reforms scheduled for completion within 90 days.

Under the approved framework, the Geological Survey of Pakistan (GSP) will undergo a complete transformation into a market oriented, technology driven organization.

The Petroleum Division has been directed to hire an independent strategy adviser to develop a business model capable of making GSP financially self-sufficient within two to three years. The plan also calls for a reduction of 50-60 percent of administrative staff, 20-30 percent cuts in the remaining workforce, and a 30-40 percent reduction in budget.

The Central Inspectorate of Mines will be wound up entirely, with all posts abolished within 90 days. The Department of Explosives will remain operational but will be required to develop a cost recovery mechanism, including possible charging arrangements for services provided to provinces.

However, one of the most significant and controversial recommendations is the decision to privatize Pakistan Mineral Development Corporation (PMDC) in the first phase alongside Saindak Metals Private Limited (SML) and ENAR Petrotech Services (Pvt) Ltd. 

The Petroleum Division has been instructed to seek feedback from the Privatization Commission and submit a privatization plan within 90 days.

The move has raised questions among industry stakeholders, given PMDC's strong financial performance and strategic role in the country's mineral sector.

PMDC is Pakistan's only federally owned mining company, with more than 50 years of operational experience and a presence across all provinces. The corporation manages 19 mining ventures, including five salt mining projects, four coal projects, seven joint ventures, and three exploration projects. It holds mining leases covering more than 61,000 acres and exploration leases spanning approximately 247,000 acres, in addition to substantial commercial and residential land holdings.

The corporation operates the historic Khewra Salt Mines, one of Pakistan's most iconic tourism and mining assets, as well as the Sor-Range underground coal mine in Quetta andDuddar Lead-Zinc Project in Lasbela

Financially, PMDC has recorded consistent growth over recent years. Revenue increased from Rs2.8 billion in FY2021-22 to a record Rs5.27 billion in FY2024-25. Profit after tax rose from Rs800 million to over Rs2.35 billion during the same period, with the highest-ever profit of Rs2.6 billion recorded in FY2023-24.

The corporation's dividend payments to the federal government have also increased significantly, reaching Rs1 billion in FY2024-25, compared with Rs300 million in FY2022-23. In addition to dividends, PMDC contributed approximately Rs10.4 billion to the national exchequer over the past five years through taxes, royalties, and other payments.

At the time of the privatization decision, PMDC was implementing an ambitious transformation strategy comprising 17 new projects. These include large-scale antimony exploration blocks in Balochistan, chromite mining projects in Malakand, iron ore acquisitions, rare earth element exploration in Swabi, gold prospecting in Gilgit-Baltistan and Punjab, mechanized mining initiatives, and value-added coal processing projects.

The corporation has previously secured foreign investor interest, including a proposed $200 million investment from a United States-based company for establishing a state-of-the-art pink rock salt grinding and packaging facility aimed at export markets, Additional projects include soda ash plants, mineral processing facilities, and expansion of value-added salt exports.

The rightsizing plan also recommends placing Sui Northern Gas Pipelines Limited (SNGPL), Sui Southern Gas Company Limited (SSGCL), and Pakistan State Oil (PSO) on the privatization list for divestiture, subject to reconsideration by the Cabinet Committee on State-Owned Enterprises. Meanwhile, Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Government Holdings (Private) Limited (GHPL), Pakistan LNG Limited (PLL), and Interstate Gas Systems Limited (ISGSL) are proposed to be transferred to a Sovereign Wealth Fund.

The Petroleum Division itself has been directed to reduce its workforce by an estimated 30-40 percent, lower its staff-to-officer ratio to 2.5:1, cut expenses by up to 20 percent, and accelerate privatization efforts across the sector.

As implementation plans are finalized, the proposed privatization of PMDC is expected to become one of the most closely watched elements of the government's broader rightsizing agenda, particularly given the corporation's profitability, strategic importance, and expanding portfolio of mining and exploration projects.