• Losses of Rs342bn in six months seen as ‘Rs1.9bn daily drain’ on public finances
• Circular debt crosses Rs4.9tr; unfunded pensions, weak governance deepen fiscal strain
ISLAMABAD: With relentless financial haemorrhaging of nearly Rs342bn in just six months, the cumulative losses and unfunded pension liabilities of state-owned enterprises (SOEs) have crossed Rs7.5tr — almost three times the country’s defence allocation of Rs2.55tr for FY26, and over seven times the upcoming year’s Public Sector Development Programme (Rs1tr).
The Ministry of Finance informed the Cabinet Committee on State-Owned Enterprises (CCoSOEs) on Friday that total SOE losses now exceed Rs5.8tr — nearly one-third of the recently passed Rs17.5tr federal budget for 2025-26.
Presided over by Finance Minister Muhammad Aurangzeb, the meeting was briefed by the Central Monitoring Unit of the Finance Division on the biannual performance of federal SOEs for the period July to December 2024.
The report outlined the worsening state of SOEs, including cumulative losses of Rs5.8tr, with Rs342bn incurred in just six months.
Despite repeated increases in electricity and gas tariffs over the past three years, circular debt in the oil, gas and power sectors has surged to over Rs4.9tr — almost double the defence budget — severely affecting cash flows and asset valuations.
The committee was told that government fiscal support to SOEs — via grants, subsidies, loans and other injections — also exceeded Rs600bn in just six months, equivalent to nearly 10pc of total revenue receipts.
Unfunded pension liabilities in power distribution companies (Discos) and other SOEs, estimated at Rs1.7tr, remain off the government’s books, as do the pension obligations of Pakistan Railways.
Government guarantees currently stand at Rs2.2tr, while costs related to debt rollovers and financial restructuring further tighten fiscal space. The meeting was informed of persistent governance issues, particularly weak transparency in beneficial interest disclosures under IFRS Section 30, and other regulatory compliance gaps. A lack of strategic alignment and operational inefficiencies were identified as urgent areas for reform.
The cabinet committee noted with concern the staggering Rs5.8tr in cumulative losses, including Rs342bn in just six months — a daily average loss of Rs1.9bn, according to an official statement.
Finance Minister Aurangzeb deplored inefficiencies in Disco operations, delays in grid upgrades by NTDC, and ballooning pension obligations. He warned that weak governance standards are undermining fiscal space and deterring investor confidence.
He stressed the need for urgent reform in the power and energy sectors, where circular debt has crossed Rs4.9tr, and reaffirmed the government’s commitment to enhancing transparency, financial discipline, and accountability across SOEs.
He vowed to push through governance and operational reforms to ensure the financial sustainability of public sector entities.
Mr Aurangzeb also directed that all government-nominated directors on SOE boards exercise due diligence and actively contribute to improving financial and operational performance through informed decision-making.
Ironically, each SOE board includes at least one senior official from the finance ministry — alongside representatives from relevant line ministries — who receive generous remunerations for attending quarterly board meetings, yet the financial bleeding remains unchecked.
The finance minister underscored the importance of aligning business plans with national priorities and tackling operational challenges in a coordinated and timely fashion. The meeting was also attended by ministers from the ministries of Power, Maritime Affairs, and Science and Technology.
The committee approved the appointment of chairpersons for Quetta Electric and Gujranwala Electric, as well as the constitution of the Board of Directors for the Independent System Market Operator (ISMO) and an independent director for GENCO Holding Company Ltd (GHCL), as proposed by the Power Division.
It also approved the nomination of independent directors for the boards of Multan Electric Power Company (MEPCO), Power Information Technology Company (PITC), and the formation of the board for Energy Infrastructure Development and Management Company (EIDMC).
Additionally, the committee approved a summary from the Ministry of Railways seeking the winding up of three railway subsidiaries — RAILCOP, PRACS, and PRFTC.
Published in Dawn, June 28th, 2025
