Page 58 - CMA Journal (May-Jun 2026)

A r t ic le S ec t ion

These SOEs have contributed to the economy in terms SOEs is attributed to government’s reluctance or Unfunded pension liabilities” in Table 5: Loss Making SOEs for FY2025
of revenue and employment generation as well as delayed action to implement cost-re ective tari the balance sheets are another Company Name FY2024-25 (PKR billion) Weightage (%)
ful lling other social and strategic objectives as adjustments, due to political reasons, which result in scal time bombs ready to
exhibited in Table 1. revenue shortfalls. explode any time. As of June National Highway Authority (NHA) -294.9 35.4
However, despite having an asset base of trillions of In terms of net position, the situation has worsened 2025, the State-owned Quetta Electric Supply Co. (QESCO) -112.7 13.5
rupees but persistently posting losses, these SOEs have with the outgoing nancial year witnessing 301% enterprises owe Rs. 2.03 trillion Peshawar Electric Supply Co. (PESCO) -92.7 11.1
now evolved into a crisis where they have become a surge in net losses which increased from Rs. 30.6 billion to its employees. Alarmingly, Pakistan Railways -60.3 7.2
direct impediment to national scal framework. As per in FY2024 to Rs. 122.9 billion in FY2025, as displayed in these liabilities have never been
the latest available release on Consolidated SOE Table 3. Despite holding a massive asset base of Rs. provisioned for, meaning no All Others -272.3 32.7
position by the Ministry of Finance, the book value of 37,988 billion, FY 25 saw net margin of -0.3% meaning funds are set aside to meet these
their assets was Rs. 37.9 trillion. In scal year (FY) thereby that the state is experiencing a net wealth obligations while interest Total -832.8
2024-25, commercial SOEs collectively had revenues of erosion each passing year. accumulates daily.
Rs. 12.4 trillion (approx.) while on net level they SOE’s performance has historically been divided into Source: SOE Report 2025
recorded losses of Rs. 122 billion, which was 300% “Pro t making SOE’s” and “Loss making SOE’s.” Aggregate This crisis is the direct result of
higher than net losses (Rs. 30.64 billion) incurred by pro ts across the pro t making SOE’s portfolio declined decades of systemic nancial mismanagement Table 6: Combined Debt Stock (PKR billion)
them in FY 2023-24. to Rs. 709.9 billion in FY2025 in Table 4, which is a at the state level. Crucially, the reported Rs. 2.03 Company Name As of Jun-25
trillion gure represents in Table 6, highlighting
a conservative oor. O cial government reports Oil & Gas 775.3
admit that the actual liability of entities like Power 3,021.9
The fundamental model that lies at the core of every rather than for chronic incompetence of public Pakistan Railways remains completely unknown, Financial 11.7
tax system around the world is that the businesses and enterprises that were created to serve them. Pakistan’s indicating that these unfunded pension Trading & Marketing 868.5
citizens of the country surrender a portion of their State-owned enterprises are classic examples of this obligations constitute a massive scal risk. Industrial Estate Development -
earnings to the government. On a quid pro quo basis, sorry state of a airs where hundreds of billions of Lacking any dedicated funding reserves, these
the government in return deploys those funds for the taxpayers’ money goes down the drain. immediate payout obligations must be kept
welfare of the public by building modern, Historically, the role of State-Owned Enterprises (SOEs) a oat through annual cash grants from the Manufacturing, Mining & 305.7
infrastructure, o ering health facilities, improving has been signi cant in Pakistan’s economy. These national budget. Engineering
schools for quality education, providing security and enterprises were established to lay the foundation for Infrastructure, Transport & ITC 4,582
maintaining law and order as well as o ering industrialization, infrastructure development, address Over time, changing economic policies, Miscellaneous 6.1
business-friendly environment leading to shared market dynamics and facilitate public. The footprint of technological advancements, and shifting Total 9571.2
prosperity. these SOEs is spread across various sectors such as global market dynamics have diminished the Source: SOE Report 2025
However, no scal framework, or governance model, as energy, transportation, telecommunications, nance, role and economic contribution of SOEs. Today,
these entities face acute operational and
well as economic literature has ever imagined a system manufacturing, hospitality and are directly owned or nancial challenges, struggling to maintain Table 7: Sector Wise Bifurcation of Pension Liabilities (PKR billion)
in which citizens are made to pay not for the welfare controlled by both federal or provincial governments.
basic commercial viability due to deeply Company Name As of Jun-25
entrenched institutional ine ciencies, chronic Oil & Gas 89.3
oversta ng, and subpar management practices. Power 1,519.4
Furthermore, heavy bureaucratic hurdles, a Financial 175.7
Total revenue for the commercial entities declined reduction of 13% as compared to Rs. 820.7 billion in distinct lack of innovation, and reliance on Trading & Marketing 1.0
from Rs. 13,524 billion in FY2024 to Rs. 12,430 billion in FY2024. This is a concerning situation where pro table obsolete technology severely restrict daily Industrial Estate Development 0.2
FY2025 as seen in Table 2, a contraction of entities/segments are also becoming white elephants. operational e ciency. Compounding these
approximately Rs. 1,093 billion or roughly 8%. These The report states that decline is driven by a Moreover, in Table 5, the sum of losses of top four and widespread structural ine ciencies that severely technical failures, systemic governance de cits, Manufacturing, Mining & 6.4
signi cant declines signal a structural weakening in combination of rising operational costs, delayed tari loss-making SOEs contributes around 67.2% to the compromise their market competitiveness. most notably political interference, nepotism, Engineering
the commercial performance of large SOEs, adjustments, and subdued commercial throughput. and administrative corruption, have completely Infrastructure, Transport & ITC 190.2
particularly in the power, oil & gas (O&G), and transport More than 50% of pro tability comes from 4 entities total losses of SOEs portfolio in 2024-25, these entities The crisis extends beyond the income statement, undermined the broader institutional Miscellaneous 48
sectors. namely i.e. OGDCL, Pakistan Petroleum, National Bank are National Highway Authority (NHA), Quetta Electric posing an even greater risk at the balance sheet level. framework necessary for transparent Total 2,030.1
of Pakistan and WAPDA. Supply Co. (QESCO), Peshawar Electric Supply Co. Source: SOE Report 2025
The aforementioned report mentions the reasons that (PESCO) and Pakistan Railways. SOE nancial liabilities now threaten the country’s operations.
include for example in the power sector, chronic tari On the ip side, the aggregate losses attributed to entire scal framework. Total accrued interest has
and pricing misalignments that continue to suppress SOEs marginally reduced to Rs. 833 as compared to Rs. According to these results, the nancial viability of surged to Rs. 2,184,490 million. Since these entities About the Authors: Ms. Huzaima Bukhari & Dr. Ikramul Haq,
realizable revenue coupled with the issue of circular 851.4 billion in FY2024 i.e. a 2% reduction showing SOEs is now unsustainable. Constant sector losses have cannot service their debts, unpaid interest lawyers and partners of Huzaima, Ikram & Ijaz, are Adjunct
debt accumulation and distribution losses, causing modest progress. However, the underlying problems transformed these entities into a continuous drain on compounds, driving up nancial costs exponentially. Faculty at Lahore University of Management Sciences (LUMS),
members Advisory Board and Visiting Senior Fellows of Pakistan
further aggravation. Additionally, loss-making still remain unaddressed. The annual loss of Rs. 832.8 the national exchequer, consuming hundreds of Institute of Development Economics (PIDE). Mr. Abdul Rauf
enterprises in rail and aviation underperform billion translates to approximately Rs. 3 billion per day billions of rupees annually. This poor performance Further, circular debts in power and gas sectors have Shakoori is a corporate lawyer based in the USA and an expert in
commercially, with constricted revenues on account of in losses, highlighting the need for structural reforms stems from deep-rooted governance issues, including reached Rs. 1.9 trillion and Rs. 2 trillion respectively, ‘White Collar Crimes and Sanctions Compliance’. They have
aging infrastructure and operational ine ciencies. and addressing chronic issues like oversta ng, pricing political interference, a lack of operational autonomy, which in itself cast challenges on their overall coauthored a book, Pakistan Tackling FATF: Challenges and
Prima facie, a common reason for ine ciency across all distortions, and governance de cits. sustainability, exhibited in Table 6. Solutions

56 ICMA’s Chartered Management Accountant, May-Jun 2026