ISLAMABAD: Pakistan’s state-owned enterprises (SOEs) continue to weigh heavily on the economy, as their profits and revenues dropped significantly in the first half of FY2024-25, driven largely by persistent inefficiencies and mounting losses in the power sector.
According to the Ministry of Finance’s biannual report released on Friday, aggregate revenues of federal SOEs fell by 8%, while profits dipped 10% during July–December FY25. The Central Monitoring Unit (CMU) flagged the power sector as the biggest drag, with cumulative losses hitting an alarming Rs5.9 trillion — Rs2.4 trillion of which stems from circular debt alone.
Distribution companies (Discos) reported core operational losses of Rs283.7 billion over six months, plagued by outdated infrastructure, poor recoveries, energy theft, and transmission constraints due to delayed upgrades by NTDC. Despite Power Minister Awais Leghari’s recent claim of Rs191 billion in improved recoveries and theft control, the sector remains financially unsustainable without subsidies.
The report noted that total SOE debt, including accrued interest and rollover costs, reached Rs8.83 trillion. Meanwhile, unfunded pension liabilities and contingent liabilities from government guarantees hit Rs2.245 trillion.
Federal SOEs recorded gross revenues of Rs6.459 trillion, down from the previous year due to declining global oil prices and reduced interest income. Loss-making SOEs posted combined losses of Rs343 billion, while overall net profits, after adjustments, stood at Rs114 billion — a slight improvement from Rs101 billion a year earlier.
The National Highway Authority (NHA) led the losses with Rs153.3 billion, pushing its cumulative deficit to nearly Rs2 trillion. Major loss-making entities included Quetta Electric Supply Company (Rs58.1bn), Sukkur Electric Power Company (Rs29.6bn), Pakistan Railways (Rs26.5bn), and Pakistan Steel Mills (Rs15.6bn).
In contrast, profitable SOEs collectively earned Rs457.2 billion. Top performers included OGDCL (Rs82.5bn), Faisalabad Electric Supply Company (Rs53.5bn), Pakistan Petroleum Ltd (Rs49.9bn), and National Power Parks Management Company (Rs37.4bn).
To prop up struggling SOEs, the government extended Rs616 billion in support during the period — including Rs333 billion in subsidies, Rs113 billion in grants, Rs92 billion in loans, and Rs77.5 billion in equity injections.
The report underscored the need for urgent structural reforms — including governance overhauls, privatisation, technology adoption, and tariff realignments — warning that failure to act would deepen fiscal vulnerabilities and stall the energy sector’s recovery.
Story by Khaleeq Kiani
