Sign in Subscribe
Cabinet officials

Strengthening Governance and Financial Sustainability of State-Owned Enterprises in Pakistan

Strategic Insights

— 2 min read

The Pakistani government has reiterated its commitment to overhauling the financial health and operational efficiency of its State-Owned Enterprises (SOEs), which have been facing significant challenges. A recent meeting of the Cabinet Committee on State-Owned Enterprises (CCoSOEs) heard a detailed briefing on the biannual report on Federal SOE Performance, which highlighted cumulative losses of Rs5.8 trillion and a staggering circular debt of Rs4.9 trillion in the oil, gas, and power sectors. The government has emphasized the need for timely reforms, particularly in the power and energy sectors, and has vowed to bring greater transparency, financial discipline, and accountability to the SOE landscape.

Key Takeaways:

  • The Pakistani government has committed to strengthening the governance, operational efficiency, and financial sustainability of key public sector entities, with a focus on aligning business plans with national priorities.
  • The biannual report on Federal SOE Performance revealed cumulative losses of Rs5.8 trillion, with Rs342 billion incurred in just six months, equating to a daily loss of Rs1.9 billion.
  • The circular debt in the oil, gas, and power sectors has crossed Rs4.9 trillion, severely affecting cash flows and asset valuations.
  • The government's fiscal support to SOEs, through grants, subsidies, loans, and other injections, has exceeded Rs600 billion in six months, equivalent to nearly 10 percent of total revenue receipts.
  • Unfunded pension liabilities in DISCOs and other SOEs, estimated at Rs1.7 trillion, remain off the books, as do railways' pension obligations.
  • Governance concerns persist, with low levels of transparency in beneficial interest disclosures under IFRS Section 30 and other compliance gaps.
  • The cabinet committee identified strategic alignment in business plans and operational inefficiencies across SOEs as critical areas requiring urgent reform.
  • The charter emphasized the importance of due diligence by directors representing the government on the boards of State-Owned Enterprises to safeguard the financial health and operational performance of these entities.

Statistics:

  • Cumulative losses of SOEs amounting to Rs5.8 trillion, with Rs342 billion incurred in just six months.
  • Daily loss: Rs1.9 billion.
  • Circular debt in the oil, gas, and power sectors: Rs4.9 trillion.
  • Government's fiscal support to SOEs: Rs600 billion in six months.
  • Unfunded pension liabilities: Rs1.7 trillion.
  • Current government guarantees: Rs2.2 trillion.
  • Rollover costs and financial restructuring liabilities: further compounding fiscal pressures.

Sources:

  • Senator Muhammad Aurangzeb, Federal Finance and Revenue Minister
  • Sardar Awais Ahmed Khan Leghari, Federal Power Minister
  • Muhammad Junaid Anwar Chaudhry, Maritime Affairs Minister
  • Khalid Hussain Magsi, Science and Technology Minister
  • Central Monitoring Unit of the Finance Division
  • Cabinet Committee on State-Owned Enterprises (CCoSOEs) meeting minutes

Read more