ISLAMABAD: In an unusually candid assessment, the federal government on Friday admitted to persistent governance failures and low transparency in state-owned enterprises (SOEs), with cumulative losses soaring to a record Rs5.9 trillion by December 2024.
The admission came through a statement issued by the Ministry of Finance following a meeting of the Cabinet Committee on State-Owned Enterprises (CCoSOEs), chaired by Finance Minister Muhammad Aurangzeb. The statement pointed to widespread operational inefficiencies, misaligned business strategies, and weak compliance with legal obligations under the SOEs Act.
Highlighting the alarming state of public sector entities, the finance ministry revealed that SOEs incurred Rs342 billion in additional losses in just six months—equivalent to a staggering Rs1.9 billion daily. Much of the financial hemorrhaging stemmed from the power and gas sectors, where circular debt has now ballooned to Rs4.9 trillion.
Aurangzeb stressed the urgent need to reform the governance and operational frameworks of SOEs, particularly distribution companies (DISCOs) and the National Transmission and Despatch Company (NTDC), citing slow infrastructure upgrades and unfunded pension liabilities—now estimated at Rs1.7 trillion—as key concerns.
The report also noted that fiscal support to SOEs—including subsidies, grants, and loans—exceeded Rs600 billion in the first half of FY25, representing nearly 10% of total revenue. Government guarantees currently stand at Rs2.2 trillion, further compounding fiscal pressures.
The finance minister urged government-appointed directors on SOE boards to take a more active and informed role in improving corporate performance and safeguarding public finances.
In structural moves, the committee approved new board appointments at several major power entities, including Qesco, Gepco, Mepco, and Genco Holding Company Limited. It also sanctioned the dissolution of three loss-making subsidiaries of the Ministry of Railways—RAILCOP, PRACS, and PRFTC.
The government reaffirmed its commitment to enforcing transparency, fiscal discipline, and accountability across the SOE landscape to restore investor confidence and improve national economic resilience.
Story by Shahbaz Rana
