Pakistan’s state-owned enterprises report Rs905 billion in losses

Pakistan’s state-owned enterprises (SOEs) incurred total losses of Rs905 billion for the fiscal year 2022-23, reflecting a 23% increase from the previous fiscal year, according to the “Aggregate Annual Report on Federal State-Owned Enterprises (SOEs) for Financial Year 2023” released by the Central Monitoring Unit (CMU) of the Finance Division.

According to Geo News, the report revealed that these losses resulted in aggregate net losses of Rs202 billion, a 25% year-on-year increase. 

Liabilities surged to Rs29,721 billion, marking a 20% increase and indicating higher financial leverage. Consequently, net equity declined by 2.55% to Rs5.49 trillion.

The power sector, particularly distribution companies (DISCOs), continued to show high losses, with aggregate losses amounting to Rs304 billion despite an allocation of Rs759 billion to support the sector. 

Infrastructure entities, such as the National Highway Authority (NHA), also faced high financial costs, further worsening the overall loss scenario. 

The railways sector contributed to the escalating losses, with a cumulative loss of Rs5,595 billion over the past decade.

To sustain these SOEs, the government provided aggregate support of Rs1,021 billion through equity injections (Rs267 billion), grants (Rs223 billion), subsidies (Rs403 billion), and loans (Rs128 billion). 

This support accounted for more than 10% of the federal budget’s receipts, highlighting significant fiscal strain.

Guarantees provided amounted to Rs1,656 billion, while the debt stock reached Rs3,545 billion, with accrued interest on NHA loans alone exceeding Rs1,100 billion. 

These high debt and guarantee levels pose significant risks for the sector, exposing it to both systemic and non-systemic risks. 

Systemic risks include economic downturns, inflation, and interest rate fluctuations, which exacerbate financial strain on SOEs and complicate debt servicing.

Despite these challenges, SOEs contributed Rs466 billion to the national exchequer in taxes, a 24% increase, while non-tax revenues, including sales taxes, royalties, and levies, totalled Rs952 billion, up 58%. Dividends contributed Rs63 billion, marking a 43% increase.