SOEs losses climb to Rs6.5 trillion as profitability of top govt entities weakens

Pakistan’s state-owned enterprises (SOEs) continue to add pressure on public finances, with accumulated losses reaching Rs6.5 trillion and increasing by Rs700 billion to Rs900 billion annually, even as profitability among the top-performing firms declined in fiscal year 2024–25, according to a report prepared by the Ministry of Finance.

The State-Owned Entities report shows that the combined profit of the top 15 SOEs fell 5% year-on-year to Rs622 billion in FY25, down Rs30 billion from the previous year. Only one company posted profits above Rs100 billion during the year, highlighting a concentration of earnings amid broader weakness.

Among profit-making entities, Oil and Gas Development Company Limited remained the highest earner with Rs170 billion in profit, despite a 19% decline from the previous year. Pakistan Petroleum Limited earned Rs90 billion, down 22%, while National Bank of Pakistan recorded Rs57 billion in profit, up 106%.

The oil and gas sector’s combined profits declined by about one-fourth to Rs366 billion. The finance ministry attributed the drop to receivables lock-up linked to circular debt, price normalisation, and the impact of tax demands by the Federal Board of Revenue.

Other notable contributors included Water and Power Development Authority with Rs52 billion, Government Holding Private Limited with Rs49 billion, Karachi Port Trust with Rs35.3 billion, and Port Qasim Authority with Rs35 billion. Pak-Arab Refinery Company earned Rs22 billion, down 60%, while Pakistan National Shipping Corporation posted Rs20.5 billion.

Despite these profits, the report said aggregate earnings of all government-owned companies declined 13% year-on-year to Rs710 billion, as margin pressures increased due to higher costs and delayed tariff adjustments. Daily losses across SOEs were estimated at about Rs3 billion, translating into more than Rs1 trillion annually.

The report, approved by the Cabinet Committee on State-Owned Enterprises and awaiting ratification by the federal cabinet, has not yet been formally released. It also highlights governance shortcomings across public sector companies, citing incomplete boards, weak accountability, and limited effectiveness of audit and risk committees. 

The Central Monitoring Unit of the Ministry of Finance said oversight quality and board effectiveness are not systematically assessed, while decision-making remains weak.

Less than 36% of SOEs completed audits on time, the report noted, resulting in delays and financial decisions based on estimates rather than audited accounts. The ministry said inconsistent reporting of key performance indicators and risk exposures has reduced valuation credibility and increased fiscal risks.

The ministry said the net financial position indicates value erosion at the profit level, with losses outpacing earnings despite a large asset base. SOE assets declined 1% to Rs38 trillion during the year, underscoring continued fiscal exposure from the public sector enterprise portfolio.