Pakistan’s state-owned enterprises (SOEs) are rapidly becoming unsustainable fiscal sinkholes, their structural decay and operational lethargy dragging the national economy into deeper peril.
With cumulative losses ballooning and debt scaling unprecedented heights, these once-pivotal institutions now symbolize chronic inefficiency, political inertia, and financial fragility. As sector-wide losses inch toward Rs600 billion annually, and total SOE debt crosses Rs8.8 trillion, the urgency for systemic reform can no longer be postponed.
The SOEs are hemorrhaging finances on an extraordinary scale, having amassed cumulative losses that now tower at Rs5.9 trillion. Just in the initial half of fiscal year 2025, a fresh financial haemorrhage of Rs345 billion exacerbated the already dire ledger. In parallel, unfunded pension burdens from 15 public-sector giants have surged to a daunting Rs1.7 trillion, underscoring the weight of long-ignored liabilities. The cancer of circular debt has gnawed away at the fiscal musculature of otherwise solvent state-run conglomerates such as GHPL, OGDCL, PSO, and PPL. Entangled in a web of inter-corporate dues, these entities now wrestle with Rs4.9 trillion in mutual obligations, eroding not only balance sheet clarity but also strangling operational agility. The power sector, plagued by chronic inefficiency, accounts for nearly half—Rs2.4 trillion—of this enervating debt quagmire.
The latest bi-annual dossier on SOEs paints a financial landscape rife with dysfunction. Foremost among the loss-generating leviathans is the National Highways Authority (NHA), clocking a staggering Rs153.3 billion in losses—ballooning its cumulative deficit to Rs1,953.4 billion. Its toll-based revenue model, structurally unsustainable, has proven a bottomless pit. Similar fiscal decay afflicts the Quetta Electric Supply Company (QESCO) and Sukkur Electric Power Company (SEPCO), hemorrhaging Rs58.1 billion and Rs29.6 billion respectively, inflating their historic losses to Rs770.6 billion and Rs473 billion—grim testaments to a crumbling distribution infrastructure.
This financial autopsy, mandated under the IMF’s reform protocols, also spotlights other institutional black holes. Pakistan Railways slumped with a Rs6.7 billion shortfall (adding to Rs26.5 billion cumulative losses), while Peshawar Electric Supply Company (PESCO) plunged by Rs19.7 billion, swelling its aggregate deficit to Rs684.9 billion. Pakistan Steel Mills (PSM), a monument to industrial atrophy, posted a Rs15.6 billion bleed, dragging its total losses to a jaw-dropping Rs255.8 billion. Elsewhere, Pakistan Telecommunication Company Limited (PTCL) reported a Rs7.2 billion dip (Rs43.6 billion in lifetime erosion), Pakistan Post notched Rs6.3 billion in red ink (Rs93.1 billion in historic losses), and Utility Stores Corporation, with Rs4.1 billion in fresh losses, now drowns under Rs15.5 billion in total arrears. These figures illuminate systemic entropy and administrative inertia.
Power generation outfits, notably the GENCOs (I through IV), collectively lost Rs8.3 billion: Guddu (GENCO-II) with Rs3.8 billion, Muzaffargarh (GENCO-III) at Rs3.1 billion, and Jamshoro (GENCO-I) at Rs1.3 billion. Neelum Jhelum Hydro Power Company, another critical node, recorded a Rs2.3 billion loss, its total deficits stacking up to Rs58.2 billion. The collective abyss formed by “All Other” SOEs added Rs2.7 billion in new losses, elevating their cumulative financial ruin to Rs1,285.96 billion—raising the grand total across more than 15 bleeding entities to an astonishing Rs5,893.2 billion. It’s a fiscal autopsy revealing institutional rot down to the marrow.
Delving deeper into the six-month fiscal review of power distribution companies (DISCOs), a troubling pattern emerges—one of escalating structural collapse. Once the sugarcoat of government subsidies is stripped away, the raw, unadulterated operational losses tally up to Rs283.7 billion. Quetta Electric Supply Company Limited leads this financial exsanguination with Rs92.65 billion in genuine losses, trailed by PESCO at Rs53.68 billion and Hyderabad Electric Supply Company Limited at Rs39.63 billion.
Even relatively stable DISCOs like Multan, Faisalabad, and Gujranwala, which posted EBIT figures of Rs8.4 billion, Rs52 billion, and Rs20.9 billion respectively, unravelled into deficit zones once subsidies were yanked away—plunging into actual losses of Rs35.17 billion, Rs13.12 billion, and Rs7.32 billion correspondingly. Other regional distributors—Lahore, Islamabad, Sukkur, and the Tribal areas—exhibited fleeting gains or nominal losses, yet faltered fatally post-adjustment. The debacle at Quetta’s DISCO is particularly damning: an EBIT vacuum of Rs60.36 billion, even after Rs32.3 billion in subsidies, still left a gaping fiscal crater.
Layered atop this monetary ruin is a persisting technical and commercial attrition rate of 20pc in electricity units—evidence of endemic failures in metering, collection, and transmission architecture. This isn’t mere mismanagement—it’s a systemic, spiraling collapse demanding ruthless recalibration.
The ingrained structural frailty within Pakistan’s state-run energy framework has driven the six-month sectoral average loss perilously close to Rs300 billion—projecting an annual hemorrhage of Rs600 billion. This runaway fiscal leakage unveils a glaring and time-sensitive call for systemic transformation. Unless swift and surgical reforms are executed—focusing on governance recalibration, digital optimization, privatization initiatives or concession-driven models, and tariff architecture rationalization—the economic rot will deepen, not only exacerbating the burden on the national treasury but also stalling comprehensive energy sector regeneration and deterring capital infusion.
Compounding this fiscal distress is the surge in sovereign guarantees, which have escalated to Rs2,245 billion—an uptick from the prior Rs1,400 billion mark. This spike stems largely from the integration of self-liquidating guarantees granted to entities such as PASSCO and the Trading Corporation of Pakistan (TCP). Yet, the methodology employed to evaluate these guarantees remains suboptimal, lacking harmony with global benchmarking standards. A strategic recalibration of this framework is imperative.
Despite the predominance of loss-making enterprises, a handful of state-run corporations have managed to remain profitable, collectively generating Rs457.2 billion. Among these, Oil and Gas Development Company Limited (OGDCL) emerged as the crown jewel, raking in Rs82.5 billion. Faisalabad Electric Supply Company Limited (FESCO) followed closely with Rs53.5 billion, though this figure is heavily padded by Rs38.9 billion in government subsidies and Rs5.8 billion in ancillary income. Pakistan Petroleum Limited (PPL) also held firm with Rs49.9 billion, while National Power Parks Management Company Limited (NPPMCL) showcased commendable fiscal performance with Rs37.4 billion in profits.
Mounting debt, exacerbated by misaligned operations, market turbulence, and decaying infrastructure, renders the government increasingly exposed to contingent fiscal shocks. Credit risk, in particular, looms large. Numerous SOEs are tethered to the state’s credit umbrella, surviving on sovereign guarantees while wrestling with delayed receivables that compel borrowing at punishing rates—tightening the noose around the government’s fiscal leeway.
The SOEs, once intended as engines of national development, have devolved into colossal liabilities, siphoning resources while delivering diminishing returns. The illusion of sustainability—propped up by subsidies, sovereign guarantees, and state bailouts—is quickly unraveling. Without a bold, uncompromising pivot toward structural reform—encompassing governance overhauls, privatization, debt restructuring, and revenue model recalibration—the state risks further fiscal destabilization. The warning signs are blaring: unless decisive action is taken, these enterprises will continue to strangle economic recovery, repel investment, and drain the country’s already strained financial reserves.