SOEs in Pakistan face Rs1.4tr loss over two years

A consolidated report released by the Ministry of Finance reveals that state-run commercial entities in Pakistan incurred staggering losses amounting to Rs1.395 trillion over the fiscal years 2021 and 2022.

The report, titled ‘Federal Footprint State-Owned Enterprises (SOEs) Consolidated Report FY2020-22,’ raises concerns about financial management and operational efficiency in the public sector.

Of the 81 evaluated SOEs, 50 reported a combined profit of Rs568.44 billion in fiscal 2022, but this was overshadowed by the Rs730.26 billion cumulative loss of the remaining 31 entities, resulting in a net loss of about Rs162 billion.

The report highlights that Pakistan Steel Mills, which remained closed for almost a decade, miraculously turned a loss of Rs18.75 billion in 2021 into a profit of Rs7.15 billion the next year. The National Highway Authority (NHA) remained the top loss-making entity for both years, with a combined loss of Rs422 billion.

While the commercial SOE portfolio is contributing significantly to the national economy through corporate taxes, dividends, and employment, the report underscores the challenges in balancing socio-economic goals with operational efficiency in certain sectors.

The manufacturing, mining, and engineering sectors showed robust growth, posting a net profit of Rs12.27 billion in 2021, while the oil and gas sector, with assets worth Rs5.62 trillion, experienced revenue expansion of 82%.

The report also sheds light on the challenges faced by the power sector, which saw assets climb to Rs6.48 trillion but exhibited net losses and a considerable reliance on government support. State-run media, including Pakistan Broadcasting and Pakistan Television, remained a burden on the public kitty, with zero dividends paid to the government.

The report underscores the need for a comprehensive review of financial management and operational strategies to address the significant losses incurred by state-owned entities in Pakistan.

In addition the Islamabad Chamber of Commerce and Industry (ICCI) has expressed grave concerns over the massive losses of around Rs.1.4 trillion incurred by Pakistan’s state-owned entities (SOEs) during the fiscal years 2021 and 2022 as per the report from Ministry of Finance, which was twice the size of the Public Sector Development Program.

In a statement issued on Monday, President ICCI Ahsan Zafar Bakhtawari stressed that the government should work on a war footing basis for a comprehensive strategy to save the nation from the unnecessary financial burden of these loss-making SOEs.