Despite their Rs12 Trillion Revenue, State-Owned Enterprises Remains Burden
Saad khan 
Islamabad: Despite generating Rs12 trillion in annual revenue, state-owned enterprises (SOEs) continue to impose a significant financial burden on taxpayers, with losses predominantly led by entities in the power sector, according to the Aggregate Annual Report on Federal SOEs for Fiscal Year 2023 released by the Ministry of Finance on Tuesday.
The report highlights that gross revenues surged to Rs11.92 trillion, marking a 15% increase driven by inflationary pressures, particularly in the oil and financial sectors. However, despite this revenue growth, aggregate losses among SOEs reached Rs905 billion, up 23% from the previous year. This resulted in aggregate net losses of Rs202 billion, reflecting a 25% increase year-on-year.
Assets saw a 16% increase to Rs35.22 trillion, while liabilities rose by 20% to Rs29.72 trillion, indicating higher financial leverage. Net equity, however, declined by 2.55% to Rs5.496 trillion.
The power sector, particularly on the distribution side, continued to dominate losses, totaling Rs304 billion, despite substantial government support amounting to Rs759 billion. The infrastructure sector, including entities like the National Highway Authority, also exacerbated the overall loss-making scenario.
Over the past decade, these entities have accumulated aggregate losses amounting to Rs5.595 trillion, necessitating significant government support totaling Rs1.021 trillion in equity injections, grants, subsidies, and loans.
The report underscores various risks within the SOE sector, including aged receivables and payables leading to a circular debt exceeding Rs4 trillion. Operational inefficiencies in the power sector further deteriorate SOE profitability and contribute to broader economic challenges.
Financial risks, including high debt levels and guarantees amounting to Rs1.656 trillion, pose systemic risks exacerbated by economic downturns, inflation, and interest rate fluctuations. Despite these challenges, SOEs contributed Rs466 billion in taxes, a 24% increase, along with Rs952 billion in non-tax revenues, marking a 58% rise.
The report advocates for enhanced corporate governance, urging the appointment of independent and technically qualified directors to ensure effective oversight and streamline business operations. It also calls for SOE business plans to be aligned with dynamic models to enhance operational efficiency and adaptability.
The findings highlight the critical need for comprehensive reforms within the SOE sector to mitigate financial risks, improve governance, and sustainably contribute to Pakistan’s economic stability.
