THIS is with reference to the report ‘State-owned enterprises being reformed to pay dividends, says Tarin’ (Aug 24), according which, addressing a meeting at the Pakistan Stock Exchange (PSX), the finance minister said the government was working on reforming the state-owned enterprises (SOEs), and those having sufficient cash would be encouraged to pay dividends which will help increase PSX value.

Reforming SOEs has been the manifesto of almost all the leading political parties of Pakistan, but no significant progress has ever been made in this regard despite its economic importance.

Many big SOEs, like Pakistan International Airlines, Pakistan Railways and power distribution companies, are collectively making losses of over hundreds of billions of rupees yearly, which is a burden on the country’s already struggling economy. The few SOEs that are making profits are not paying enough dividends to its shareholders due to cash flow problem or other reasons.

The Pakistan State Oil (PSO), for instance, is a national giant. The annual turnover of PSO is the highest among all public- or private-sector companies in the country. PSO announced on Aug 25 a record-breaking gross revenue of Rs1.4 trillion and the highest ever post-tax profit of Rs29.1 billion for the 2020-21 fiscal.

The net profit translated into a very healthy earning per share of Rs62.07 versus a loss of Rs13.77 in the preceding fiscal. But the company announced a dividend of merely Rs15 per share, which is highly disappointing.

After adjusting the carried-forward loss of Rs13.77 per share of 2019-20 fiscal, PSO still had a net profit of Rs48.30 per share. The share price of PSO fell sharply since the disappointing announcement of the said dividend as the shareholders appeared to be wondering about the reason behind this inexplicably low dividend payout. Was it because the PSO profit, which belongs to shareholders, was being used to finance circular debt? The PSO management surely owes an explanation to the shareholders.

Another shock for the shareholders is that the company will take at least two months to pay off the dividends. In today’s technologically advanced world, why does the PSO need that much time to pay the dividends? This is very discouraging for the shareholders.

In view of the above, I urge all concerned to look into matter of reforming SOEs on a priority basis. I believe that when the SOEs will improve their performance, the rest of the pieces of the country’s economic puzzle will start falling into place.

Ejaz Ahmad Magoon
Lahore

Published in Dawn, September 16th, 2021

Opinion

Lull before the storm
Updated 24 Oct 2021

Lull before the storm

It does not take rocket science to figure out why each of the two sides is taking the stand it is.
The larger debate
Updated 23 Oct 2021

The larger debate

The revelations show how the economy promotes inequality.

Editorial

Anti-government rallies
Updated 24 Oct 2021

Anti-government rallies

Banning a party because it can create a public nuisance sets a dangerous precedent which can be repeated to justify future bans.
24 Oct 2021

End of polio?

AFTER a long struggle, the reward is finally in sight. With only a single case of wild poliovirus reported this year...
24 Oct 2021

Heritage work

IT is encouraging that, slowly, projects of heritage conservation and preservation appear to be taking off. These...
A final push
Updated 23 Oct 2021

A final push

PAKISTAN’S hopes of exiting the so-called FATF grey list have been shattered once again. The global money...
23 Oct 2021

Kabul visit

FOREIGN MINISTER Shah Mahmood Qureshi’s flying visit to Kabul on Thursday is the first official high-level...
23 Oct 2021

Baqir’s blooper

THE remarks made by State Bank governor Reza Baqir at a London press conference have hit a raw nerve in Pakistan. In...