State-Owned Enterprises (SOEs) in Pakistan are facing a financial crisis that’s hard to ignore: a staggering 300% surge in net losses for FY25, totaling a jaw-dropping Rs832 billion across 25 entities. But here’s where it gets even more alarming—the net losses soared to Rs123 billion in FY25, up from just Rs30.6 billion in FY24. And this is the part most people miss: the National Highway Authority (NHA) alone racked up a loss of Rs294.9 billion, with Quetta Electric Supply Company (Qesco) following closely at Rs112.7 billion. Even Pakistan Railways reported a loss of Rs60.3 billion, while the Pakistan Post Office (PPO) faced a Rs19.3 billion setback. The News reported these figures on Saturday, citing the finance ministry’s Friday announcement.
But here’s where it gets controversial: While some SOEs are drowning in red ink, a handful of others are raking in massive profits. In FY2025, profit-making SOEs posted a combined profit of Rs709 billion, with the Oil and Gas Development Company Limited leading the pack at Rs169.9 billion. This stark contrast raises a thought-provoking question: Are the profitable SOEs subsidizing the failures of their loss-making counterparts? And if so, is this a sustainable model for Pakistan’s economy?
Let’s break it down further. The NHA, Qesco, Peshawar Electric Supply Company (Pesco), Pakistan Railways, and PIA Holding Company Limited were the top loss-makers in FY25. Other major culprits included the National Power Parks Management Company (Rs46.1 billion), Neelum-Jhelum Hydropower Company (Rs29.4 billion), and Pakistan Steel Mills (Rs26 billion). Even smaller entities like the National Insurance Company (Rs2.9 billion) and Pakistan Television Corporation (Rs0.6 billion) recorded losses, highlighting systemic issues across the board.
On the flip side, the profit-making SOEs are heavily concentrated. The top five contributors—Oil and Gas Development Company Limited, Pakistan Petroleum Limited, National Bank of Pakistan, Water and Power Development Authority, and Government Holdings (Private) Limited—accounted for a significant chunk of the Rs709 billion profit. This means a tiny fraction of SOEs is shouldering the burden of keeping the sector afloat, while the majority continues to hemorrhage money. Is this a fair distribution of resources, or is it time for a radical overhaul?
Financially, the SOE sector’s balance sheet in FY2025 showed mixed signals. Total equity grew by 7%, reaching Rs6,245.7 billion, thanks to recapitalization efforts and equity injections, particularly in the power sector to clear circular debt. However, total liabilities only dipped by 3%, and total assets remained virtually unchanged, dropping a mere 1%. This stability, while reassuring, doesn’t address the core issue: the massive losses incurred by certain SOEs.
Government fiscal support to SOEs surged by 37% in FY2025, hitting Rs2,078.5 billion. Here’s the kicker: nearly 16% of the federal government’s tax revenue (Rs12,970 billion) was funneled back into SOEs through subsidies, equity injections, grants, and loans. In simpler terms, for every Rs6 collected in taxes, Rs1 goes to propping up these enterprises. Is this the best use of public funds, or are taxpayers being shortchanged?
Equity injections saw the most dramatic increase, jumping to Rs728.9 billion, primarily to clear power sector circular debt. Government loans to SOEs also rose by 34%, reaching Rs354.1 billion. Meanwhile, grants and subsidies shrank, possibly indicating improved operational efficiencies or shifting priorities. Sovereign guarantees, however, spiked by 52%, though this was due to accounting adjustments rather than new commitments.
So, what’s the takeaway? The SOE sector is a tale of two extremes: a few high-performing entities propping up a sea of underperformers. While the government’s fiscal support has kept the sector afloat, it’s clear that fundamental reforms are needed to address the root causes of these losses. Are we witnessing a temporary setback, or is this a symptom of deeper structural issues? We’d love to hear your thoughts—do you think the current approach is sustainable, or is it time for a bold new strategy? Let us know in the comments!
