Pakistan's state-owned enterprises report PKR 851 billion aggregate loss for FY24

Loss making State-Owned-Enterprises (SOEs) in Pakistan recorded an aggregate loss of PKR 851 billion ($3.04 billion) for FY24, a 14.03% decrease from the previous year.

According to the Aggregate Annual Report for FY24 released by Pakistan's Ministry of Finance, federal SOEs reported gross revenues of PKR 13,524 billion, a 5.2% increase year-over-year. The total aggregate profits reached PKR 820 billion, marking a 14.61% rise.

The reported losses include government assistance, with PKR 782 billion in subsidies and PKR 367 billion in grants. Excluding PSWF entities, the net aggregate losses after offsetting with profit-making entities stood at PKR 521.5 billion.

Pakistan's SOEs operate across eight critical sectors, contributing to the economy through taxes, dividends, and employment. Despite their contributions, they often rely on government support, posing a fiscal challenge to the federal government.

Top Loss-Making SOEs & Aggregate Financial Losses

According to the report, the National Highway Authority (NHA) was the largest loss-making entity, reporting a PKR 295.5 billion loss, followed by QESCO with PKR 120.4 billion, PESCO with PKR 88.7 billion, PIA with PKR 73.5 billion, Pakistan Railways with PKR 51.3 billion, SEPCO with PKR 37 billion, LESCO with PKR 34.5 billion, Pakistan Steel Mills Corp. with PKR 31.1 billion, HESCO with PKR 22.1 billion, GENCO-II with PKR 17.6 billion, IESCO with PKR 15.8 billion, Pakistan Post Office with PKR 13.4 billion, TESCO with PKR 9.5 billion, GEPCO with PKR 8.5 billion, GENCO-III with PKR 7.8 billion, and all others cumulatively reporting PKR 23.7 billion in losses.

Accumulated losses to date stand at a colossal PKR 5,748 billion, with the majority occurring in the past 10 years alone.

According to the report, Pakistan’s power distribution companies (DISCOs) are also losing around $1 billion annually due to rampant line losses, theft, and inefficiencies, crippling their ability to upgrade infrastructure and jeopardizing the long-term viability of the energy sector.

Profit-Making SOEs

The report highlighted that OGDCL was the top profit-making entity, reporting a PKR 208.9 billion profit in 2024. Other profit-making entities included Pakistan Petroleum Limited with PKR 115.4 billion, National Power Parks with PKR 76.8 billion, Govt Holding Pvt Ltd. with PKR 69.1 billion, Pak Arab Refinery Company with PKR 55 billion, Port Qasim Authority with PKR 41 billion, MEPCO with PKR 31.8 billion, NBP with PKR 27.4 billion, WAPDA with PKR 22.2 billion, KPT with PKR 20.3 billion, PNSC with PKR 20.1 billion, PSO with PKR 19.6 billion, State Life Insurance Corp. with PKR 18.3 billion, and PKIC with PKR 15.2 billion.

Asset and Liability Growth

The book value of SOEs' assets rose by 6.37% year-over-year to PKR 38,434 billion, while liabilities increased by 6.7% year-over-year to PKR 32,571 billion, resulting in net equity of PKR 5,863 billion, a 4.47% year-over-year increase.

The report stated that the Government of Pakistan extended fiscal support totaling PKR 1,586 billion on an IFRS-compliant accrual basis of financial reporting to support these losses. This was divided into PKR 367 billion in grants, PKR 782 billion in subsidies, PKR 336 billion in loans, and PKR 99 billion in equity injections, comprising 13% of federal budget receipts.

SOE Contributions to the National Exchequer

Meanwhile, the report stated that SOEs contributed PKR 372 billion in taxes. Non-tax revenues, which include sales taxes, royalties, and levies, amounted to PKR 1,400 billion. Dividends totaled PKR 82 billion, and interest paid was PKR 206 billion. The aggregate contribution was PKR 2,062 billion.

SOE Debt Stock and Leverage & Risk Metrics

The Government of Pakistan's loans to SOEs include PKR 1,767 billion in Cash Development Loans (CDLs) and PKR 1,747 billion in Foreign Relent Loans (FRLs). Additionally, SOEs hold PKR 2,813 billion in loans from private sector banks and bonds/Sukuks, along with PKR 553 billion in other interest-bearing liabilities, such as leases. The rollover costs and accrued interest on these loans amount to PKR 2,333 billion, bringing the total value of outstanding loans, including accrued interest, to PKR 9,195 billion.