Pakistan’s state-run enterprises rack up PKR 5.89T in losses

Pakistan’s state-owned enterprises (SOEs) continue to bleed financially, recording a cumulative net loss of PKR 343 billion in the first half of FY2025. According to the Ministry of Finance’s latest report on SOE performance, accumulated losses have now surged to a staggering PKR 5,893.2 billion, exposing deep-rooted inefficiencies and structural weaknesses.

NHA tops the list of loss-making entities

The National Highway Authority (NHA) posted the highest loss of PKR 153.3 billion in the period, pushing its total accumulated losses to PKR 1,953.4 billion. The report attributes this to an “unsustainable toll-revenue model” unable to offset the scale of infrastructure expansion.

Following NHA, the Quetta Electric Supply Company (QESCO) and Sukkur Electric Power Company (SEPCO) posted losses of PKR 58.1 billion and PKR 29.6 billion, respectively. Their accumulated losses now stand at PKR 770.6 billion and PKR 473 billion, reflecting persistent inefficiencies and poor recoveries in the power distribution segment.

Other major loss-makers included:

• Pakistan Railways: PKR 26.5 billion (accumulated: PKR 6.7 billion)
• Peshawar Electric Supply Company (PESCO): PKR 19.7 billion (accumulated: PKR 684.9 billion)
• Pakistan Steel Mills (PSM): PKR 15.6 billion (accumulated: PKR 255.8 billion)
• Pakistan Telecommunication Company Limited (PTCL): PKR 7.2 billion (accumulated: PKR 43.6 billion)
• Pakistan Post: PKR 6.3 billion (accumulated: PKR 93.1 billion)
• Utility Stores Corporation: PKR 4.1 billion (accumulated: PKR 15.5 billion)

Power generation sector also in the red

Among the power generation companies, the four GENCOs (I-IV) collectively posted over PKR 8.3 billion in losses:

• GENCO-II (Guddu): PKR 3.8 billion
• GENCO-III (Muzaffargarh): PKR 3.1 billion
• GENCO-I (Jamshoro): PKR 1.3 billion

Additionally, Neelum Jhelum Hydro Power Company reported a PKR 2.3 billion loss, bringing its accumulated shortfall to PKR 58.2 billion. Other smaller SOEs under the “All Others” category added PKR 2.7 billion to the fiscal burden, with cumulative losses now totaling PKR 1,285.96 billion.

DISCOs record heavy core losses post-subsidy adjustments

The financial report highlights a worrying trend in the power distribution sector. Pakistan’s distribution companies (DISCOs) collectively reported core operating losses of PKR 283.7 billion during the six months. These losses widened significantly when government subsidies were excluded from revenue calculations.

Top contributors included:

• QESCO: PKR 92.65 billion
• PESCO: PKR 53.68 billion
• Hyderabad Electric Supply Company (HESCO): PKR 39.63 billion

Even companies showing positive earnings before interest and taxes (EBIT) turned loss-making after adjusting for subsidies:

• Multan Electric Power Company (MEPCO): EBIT PKR 8.4 billion → Net loss PKR 35.17 billion
• Faisalabad Electric Supply Company (FESCO): EBIT PKR 52 billion → Net loss PKR 13.12 billion
• Gujranwala Electric Power Company (GEPCO): EBIT PKR 20.9 billion → Net loss PKR 7.32 billion

Others, including Lahore, Islamabad, Sukkur, and Tribal Areas DISCOs, also saw EBIT gains or marginal losses but remained in deficit after adjustments. QESCO, in particular, stood out with an EBIT loss of PKR 60.36 billion despite receiving PKR 32.3 billion in subsidies—resulting in one of the highest net losses across all SOEs.

Technical losses compound sector woes

The report further points out a persistent 20% technical and commercial loss in electricity units, indicating severe issues in billing, transmission, and recovery systems. These flaws contribute to an average sectoral loss of nearly PKR 300 billion over six months—projecting to PKR 600 billion annually—highlighting the urgent need for transformative reforms in governance, technology, privatization models, and tariff structures.

Government’s fiscal support to SOEs reaches PKR 616 billion

To keep loss-making SOEs afloat, the government provided PKR 616 billion in fiscal support during the six months ending December 2024. This included:

• PKR 113 billion in direct grants
• PKR 333 billion in subsidies (primarily for the power sector)
• PKR 92 billion in loans
• PKR 77.5 billion in equity injections

This massive outlay underscores the sustained drain these enterprises place on the national treasury.

SOEs contribute over PKR 1 trillion to the exchequer

Despite the losses, SOEs contributed a total of PKR 1,043 billion to the national exchequer in the first half of FY2025. This included:

• PKR 213 billion in taxes (a 6% increase over the previous period)
• PKR 611 billion in non-tax revenues (a 58% rise, including sales tax, royalties, and levies)
• PKR 89.7 billion in dividends (a 116% increase)
• PKR 129 billion in interest payments

These contributions have helped expand fiscal space, partially offsetting the massive losses incurred.

Total SOE debt climbs to PKR 8.83 trillion

The total outstanding debt of SOEs has reached PKR 8,831 billion, including accrued interest and rollover costs. This comprises:

• PKR 1,681 billion in Cash Development Loans (CDLs)
• PKR 1,842 billion in Foreign Relent Loans (FRLs) from the government
• PKR 2,808 billion borrowed from private banks and bonds/Sukuks
• PKR 497 billion in other interest-bearing liabilities
• PKR 2,000 billion in accrued interest and rollover costs

This mounting debt burden points to deepening financial stress and reinforces the need for urgent debt restructuring and better fiscal management.

Revenues decline, but net profits improve marginally

Federal SOEs reported gross revenues of PKR 6,459 billion for the six months, a 7.9% year-on-year decline. The fall was mainly due to lower global oil prices and declining domestic interest rates, which dented the profitability of oil-related SOEs and financial institutions.

Aggregate profits declined by 10% to PKR 457 billion, while loss-making SOEs incurred a combined loss of PKR 343 billion. However, net profits, after offsetting losses, rose to PKR 114 billion, up 12% from PKR 101 billion in the same period last year.

The overall financial position improved modestly, with:

• Book value of assets up by 3.75% to PKR 37,720 billion
• Total liabilities rising 1.03% to PKR 31,092 billion
• Net equity growing by 18.8% to PKR 6,629 billion