State-Owned Enterprises Losses Analysis
“State-Owned Enterprises Losses Analysis” reveals significant inefficiencies and operational issues within the sector. On Friday, the government announced that 15 state-owned enterprises (SOEs) accounted for 99.3% of cumulative losses during the first six months of FY24. These losses highlight widespread inefficiencies within the SOE sector.
Cumulative Losses Breakdown
In absolute terms, the cumulative losses of these SOEs were estimated at Rs405.86 billion between July and December 2023. In contrast, the losses of all other SOEs amounted to Rs2.812 billion. The Finance Ministry’s Federal State Owned Enterprises Bi-Annual report on SOEs for FY24 provided these figures. However, the report also noted a decrease in overall SOE losses by 9.72% compared to the previous year’s losses of Rs452.686 billion over the same months. Since 2014, the accumulated losses have reached a total of Rs5.9 trillion.
Government Measures
The government has formed an SOE committee to address these issues. The committee will categorize SOEs and define their paths toward privatization or other corporate restructuring options. It aims to leverage private sector participation for enhanced efficiency and reduce the footprint of SOEs on the public purse. Finance Minister Muhammad Aurangzeb chairs the committee, though its progress has been slow.
Major Contributors to Losses
“State-Owned Enterprises Losses Analysis” indicates that the National Highway Authority (NHA) reported the highest loss of Rs151.3 billion. Quetta Electric Supply Company Ltd followed with Rs56.2 billion, and PIA with Rs51.7 billion. Peshawar Electric Supply Company Ltd reported a Rs39 billion loss, while Pakistan Railways recorded a Rs23.6 billion loss.
Further data shows that Sukkur Electric Power Company Ltd, Pakistan Steel Mills Corporation (Pvt) Ltd, and Islamabad Electric Supply Company Ltd also reported considerable losses. These losses amounted to Rs20.9 billion, Rs14.4 billion, and Rs12.1 billion, respectively.
Financial Support and Line Losses
The government extended fiscal support totalling Rs436 billion over the six months ending December 2023. This support included Rs120 billion in grants, Rs231 billion in subsidies, and Rs85 billion in loans. Notably, no equity injections were made during this period. This financial intervention accounted for over 7% of the federal budget’s receipts annually.
The report also quantified Discos based on line losses during the first six months of FY24. Lesco led with a line loss of Rs323.46 billion, followed by Mecpo with Rs272.96 billion and Fesco with Rs217.41 billion.
Profitable Entities
“State-Owned Enterprises Losses Analysis” also highlighted the top 15 profit-making entities for the six months of July-December 2023. These entities demonstrated strong financial performance with a profit of Rs510.20 billion. All other SOEs combined earned Rs50.20 billion in profits. Of these, the OGDCL led with a profit of Rs123.2 billion, followed by Pakistan Petroleum Ltd with Rs68.7 billion.
Revenue and Tax Contributions
The gross revenues of the SOEs reached Rs7.011 trillion, reflecting a 15% increase from the previous year’s corresponding period. However, SOEs contributed Rs200 billion in taxes, reflecting a 14% decrease compared to the last six months. Non-tax revenues, including sales taxes, royalties, and levies, amounted to Rs349 billion, representing a 27% decline. Dividends provided were Rs9 billion, a significant 71% decrease.
