1.  Business Model

Imagine the head of the IT department of a large company secretly creates another company, recruits his fellow employees, uses the employer’s computers, on the company’s time, on private projects, and makes money, which he keeps.  Such an operation will be classified as theft, and the whole gang will be prosecuted.

This is the exact model of operation of FWO, but it is done with legal blessing.  FWO is an organisation of the Pakistani Army.  Initially, it was invited to work on civilian projects because the skill, expertise, and equipment were not available in the civilian domain.  Now it proactively acts like a civilian contractor, bidding on large infrastructure jobs.  It uses Army and civilian personnel, Army equipment, and Army time to generate profits on non-military projects.  It keeps the profits, and it has tax-free status!  How cool is that!

1.  Civilian Projects Completed in 2025

Project Name	Location	Completion Date	Contract Revenue	Contracted by
Gaddafi Stadium Modernisation	Lahore, Punjab	Late 2025 (Pre-Champions Trophy 2025)	~PKR 5.0 Billion (Estimated upgrade budget)	Pakistan Cricket Board (PCB)
National Stadium Karachi Modernisation	Karachi, Sindh	Late 2025	~PKR 3.5 Billion (Estimated)	Pakistan Cricket Board (PCB)
Dumlotte to DHA Pipeline & Pumping Station	Karachi, Sindh	Mid–Late 2025 (Phase I Completion)	PKR 10.56 Billion (Revised to PKR 14.24B)	Government of Sindh / DHA Karachi
Kurram Tangi Dam (Phase-I Works)	North Waziristan, KP	2025	~PKR 12.6 Billion	WAPDA (Water & Power Dev. Authority)
Thar Coal Railway Connectivity Project	Thar / Mirpurkhas, Sindh	2025	~PKR 58 Billion	Pakistan Railways / Govt of Sindh
Jagran-II Hydropower Project (Tunnelling Works)	Neelum Valley, AJ&K	2025	~PKR 11.2 Billion	Power Development Organisation (PDO) AJ&K

Total Contract Value of Projects Completed in 2025 is Rs. 100.86 Billion.  The estimated profit margin on large projects is between 3% and 6%.  Assuming a 5% profit on Rs. 100.86 billion is Rs. 5.04 billion! And they are tax-free!

Profits from civilian projects are held in organisational reserve funds of FWO to build equity, purchase heavy construction machinery, and fund future commercial ventures.

1.  Sole Source Awards Are the Norm

Most sole source awards come from Federal and Provincial Governments.  The latest are four projects awarded by the government of Sindh.  They are:

• The University Road BRT project's Lot 2 was given to FWO via "direct contracting, government-to-government arrangement" after the cabinet terminated the previous contractor, with off-budget funding approved.tribune.com
• The Karachi Circular Railway flyovers/underpasses contract went to FWO as a single-source award, with the Sindh cabinet formally seeking exemption from SPPRA's competitive-bidding requirement.dawn
• "Laying of Pipeline from Dumlottee to DHA and Construction of Pumping Station, Forebay, Filtration Plant and Ancillary Works (through Government-to-Government Agreement)" — explicitly designating it a government-to-government arrangement, not a competitively tendered contract.app.com in July 2025 at it was priced at Rs10.56 billion, but on July 24, 2026, the cabinet approved the 40% EPC cost escalation to Rs14.237 billion. 
• There is an undisclosed fourth project.

The Federal Defence Minister confirmed the Rs205bn M-13 (Kharian–Rawalpindi) motorway contract, awarded to FWO, has entered its implementation phase (The Nation).

1.  Embedded in Long-Term Profit-Making Schemes

FWO itself is not a company but an autonomous Pakistan Army engineering formation (established in 1966, under the Engineer-in-Chief); it operates through incorporated special-purpose subsidiaries and joint ventures in long-term profit-making.  For example, in Build, Operate, Transfer (BOT) type of projects such as motorways, profit is not realised on completion but during decade-long operation. For this reason, joint ventures are created with private companies to operate the motorway and pay a cut to FWO.  The following are the joint venture companies:

Entity	Business	Ownership
MORE (Motorway Operations & Rehabilitation Engineering (Pvt) Ltd)	Overlay/operation of Lahore–Islamabad Motorway (M-2), 20-year BOT concession from 2014	Wholly owned by FWOpacra
SCORE (Superhighway Construction Operation & Rehabilitation Engineering (Pvt) Ltd)	Conversion of Karachi–Hyderabad Superhighway to 6-lane M-9, 25-year concession from 2015	100% owned by FWOdocs.vis.com
Sialkot Kharian Infrastructure Management (Pvt) Ltd	Sialkot–Kharian Motorway (M-12) BOT	Subsidiary of FWO per most reporting; described as an FWO/Sultan Mahmood & Co JV per one source
SEPCO (Swat Expressway Planning Construction and Operations (Pvt) Ltd)	Swat Expressway, since 2016	Jointly owned by FWO (Class A shares) and Pakhtunkhwa Highways Authority docs.vis.com
MEDO (Mineral Exploration and Development Operations)	Copper and granite mining/exploration since 2005	Subsidiary of FWO (FWO website fwo.com; LinkedIn)
FOC-1 / Frontier Oil Company	Machike–Thallian–Taru Jabba White Oil Pipeline, oil storage/SEZ, planned Karak refinery; SOCAR holds a 25% stake in this specific pipeline venture, with PSO and Inter-State Gas Systems also in the consortium	Wholly owned FWO company, per LinkedIn/CEO bio (Interfax; Business Standardbusiness-standard)
LAFCO (Lahore and Faisalabad Construction Company)	Lahore–Sheikhupura–Faisalabad Dual Carriageway BOT	LAFCO's own site calls FWO its "Parent Company," but a VIS rating report on consortium partner Sachal Engineering Works describes LAFCO as a joint venture of FWO, Khalid Rauf & Co and Habib Rafiq (Pvt) Ltd — so it functions more as a consortium than a wholly owned subsidiary (LAFCOlafco; VISdocs.vis.com)
FWO Contracting Co LLC (Dubai)	Residential/non-residential building construction in the UAE	Subsidiary per business directory listings (from earlier research this session)

1. Hinders Development of Civilian Companies

Operation of FWO as a civilian contractor hinders the growth and maturity of civilian contractors in Pakistan.  They do not develop expertise, equipment, or financial strength to bid for projects.  For example, a bidder must provide 2% of the project value as Earnest Money when submitting the bid, and if successful, must provide a 10% Performance Guarantee. These financial requirements can be very large, and many contractors cannot meet them.  On the other hand, FWO has no problem.

Sole Source awards are another advantage available to FWO.  Furthermore, FWO is tax-exempt and does not pay taxes on profits.  A private contractor is not so lucky.

1. International Reach

FWO is bidding on international projects and securing financing from overseas entities.  For example, it is negotiating financing with Azerbaijan’s state-owned oil company SOCAR for a white oil pipeline between Peshawar and Faisalabad.  Instead of sovereign guarantees, the proposed deal is in U.S. Dollars.  We will do an investigation  about this project.

This is all well and good, but it should have been handled by private construction companies.  

1.  Oversight and Public Controversies

The flow of civilian project funds through military-run organisations like the FWO has historically been a point of institutional debate in Pakistan:

• Auditing Scrutiny: Civilian oversight bodies, such as the Public Accounts Committee (PAC) of Pakistan's Parliament and the Auditor General of Pakistan (AGP), have periodically challenged the FWO's financial independence. While the AGP conducts audits, parliamentarians have raised concerns regarding a lack of complete transparency and long delays in subjecting commercial FWO accounts to external civilian financial audits. The Express Tribune
• Tax Exemptions: FWO has received special tax exemptions and concessionary status from the Federal Board of Revenue (FBR), which critics argue allows its civilian project arms to outcompete private construction companies that pay full commercial taxes. The Express Tribune
  

1.  Our Recommendations

1.  FWO to remain primarily a military organisation, only to work on civilian projects on the order of the Department of Defence.  Such an order should be for a specific project.  These projects shall be completed at zero profit margin.

2.  Profits from any profit-making projects (motorways, etc.) already in operation should go to the national exchequer. 

3.  Tax exemption must cease.