State-owned enterprises posted a 300% surge in net losses in FY2024-25 despite Rs12.4 trillion in revenue, highlighting debt, governance and reform challenges.
Net Losses Rise Sharply Despite Massive Revenues
Pakistan’s state-owned enterprises (SOEs) delivered mixed results in FY2024-25. While their combined revenues reached approximately Rs12.4 trillion, the sector still posted a sharp increase in net losses. According to the Annual Consolidated Performance Report presented to the Cabinet Committee on SOEs, overall net losses jumped by more than 300 percent—from Rs30.6 billion in FY2023-24 to Rs122.9 billion in FY2024-25.
The report, prepared by the Central Monitoring Unit (CMU) in the Finance Division, paints a detailed picture of the SOE portfolio, covering commercial and non-commercial entities. It tracks financial and non-financial performance, government support, fiscal flows, debt levels, governance standards and future reform plans under the SOEs Act, 2023.
Where the Losses Are Concentrated
Despite some improvement in loss-making enterprises, the overall picture remains challenging. Aggregate profits of profit-making SOEs fell by 13 percent to Rs709.9 billion, down from Rs820.7 billion a year earlier, largely due to reduced profitability in the oil sector following lower international prices.
On the other hand, aggregate losses of loss-making SOEs improved slightly, declining by around 2 percent to Rs832.8 billion. However, losses remain heavily concentrated in a small number of entities, especially in the transport and power distribution sectors. The National Highway Authority (NHA) and several power distribution companies continue to account for a major portion of the red ink, reflecting structural inefficiencies, high depreciation and financing costs, and the public service nature of some operations that are not commercially viable.
Rising Fiscal Support, Debt and Hidden Liabilities
The report also highlights the scale of government support and fiscal risks linked to SOEs. Total government support rose to Rs2,078 billion in FY2024-25, driven mainly by higher equity injections to clear circular debt stock, even as subsidies showed a modest decline. At the same time, inflows from SOEs to the government increased to Rs2,119 billion, helped by higher dividends, tax payments and interest income on government lending.
The debt profile remains a key concern. Total SOE debt at the portfolio level reached Rs9.57 trillion, including cash development loans, foreign re-lent loans, bank borrowings and accrued interest. In addition, unfunded pension liabilities across SOEs are estimated at around Rs2 trillion, which the report identifies as a major legacy risk that requires urgent policy attention. Guarantees and other off-balance-sheet contingencies stand at roughly Rs2.16 trillion, adding to the overall fiscal exposure.
Governance Reforms and IFRS-Based Reporting
To manage these risks, the government is pushing for stronger governance, transparency and accountability across the SOE landscape. The Central Monitoring Unit has been praised for consolidating financial data on an IFRS-aligned basis and building a comprehensive digital database to support evidence-based decision-making.
Committee members have stressed the need for strict enforcement of audit completion in line with the SOEs Act, 2023, and for timely transition to full IFRS-based reporting by February 2026. They also underlined the importance of realistic business plans, sector-specific engagement, credible loss-reduction strategies and hard budget constraints—particularly for entities that have been chronically loss-making.
What the New SOE Report Means for Reform
The Cabinet Committee has directed that the findings of the report be shared with all relevant ministries to shape targeted reform measures. Progress on audits, governance changes, debt rationalisation and fiscal risk containment will be reviewed on a regular basis.
The latest report is also being cleared for publication, which the committee described as a step toward greater accountability, transparency and informed policymaking. Alongside this, the government has approved appointments of independent directors in several key companies, including GEPCO, JPCL, EIDMC, ISMO, IESCO and TESCO, to strengthen boards and oversight.
Ultimately, the data shows that Pakistan’s SOEs continue to play a large role in the economy but carry significant financial and fiscal risks. Turning these entities toward financial sustainability and operational efficiency will require persistent reforms, tighter governance and a clear focus on performance.
