Pakistan SOE Losses Reach Rs. 832.8 Billion in FY25 Despite Massive Govt Support
Pakistan’s State-Owned Enterprises (SOEs) recorded massive combined losses of Rs. 832.8 billion in fiscal year 2024-25 (FY25), according to a report issued by the Ministry of Finance.
Although this represents a 2 percent improvement compared to last year, the financial burden of SOEs remains a serious concern for Pakistan’s economy. Despite heavy government financial support and sovereign guarantees, several major public sector companies continued to struggle.
In this detailed article, we will explain SOE losses in FY25, biggest loss-making companies, profitable state enterprises, government financial support, and the impact on Pakistan’s economy in easy English.
Overview: Pakistan SOE Losses FY25
State-Owned Enterprises (SOEs) are companies owned or controlled by the government. These companies operate in sectors like:
- Energy
- Transport
- Infrastructure
- Banking
- Steel
- Postal services
In FY25, total combined losses reached Rs. 832.8 billion, making it one of the largest annual financial setbacks for public sector companies.
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Largest Loss-Making SOE: National Highway Authority
The report identified the National Highway Authority (NHA) as the biggest loss-making entity in FY25.
NHA Losses in FY25:
- Rs. 295 billion
The NHA is responsible for building and maintaining national highways and motorways. However, due to:
- High development costs
- Debt servicing
- Operational inefficiencies
- Delayed toll recoveries
the authority recorded massive financial losses.
Power Distribution Companies Under Pressure
Pakistan’s electricity distribution companies (DISCOs) also posted heavy losses.
Major Power Sector Losses:
- Quetta Electric Supply Company – Rs. 112.7 billion
- Peshawar Electric Supply Company – Rs. 92.7 billion
- Sukkur Electric Power Company – Rs. 25.3 billion
- Lahore Electric Supply Company – Rs. 12.7 billion
- Hyderabad Electric Supply Company – Rs. 13 billion
- Islamabad Electric Supply Company – Rs. 1.4 billion
Why Are DISCOs Facing Losses?
Major reasons include:
- Electricity theft
- Line losses
- Poor bill recovery
- Circular debt crisis
- High fuel costs
The power sector remains one of the biggest financial challenges for Pakistan.
Transport Sector Losses Continue
The transport sector also struggled during FY25.
Pakistan International Airlines (PIA)
Pakistan International Airlines reported losses of:
- Rs. 48.9 billion
PIA has faced financial problems for years due to:
- High operational costs
- Fleet maintenance expenses
- International route suspensions
- Competition from private airlines
Pakistan Railways
Pakistan Railways recorded losses of:
- Rs. 60.3 billion
Major challenges include:
- Aging infrastructure
- Poor track maintenance
- Fuel price increases
- Operational inefficiencies
Other Loss-Making Public Sector Companies
Pakistan Steel Mills
Pakistan Steel Mills posted losses of:
- Rs. 26 billion
The steel mill has remained mostly inactive for years, causing heavy financial losses.
Pakistan Post
Pakistan Post recorded:
- Rs. 19.3 billion losses
Digital communication and courier competition have reduced postal revenue.
Slight Improvement: 2% Reduction in Total Losses
Despite heavy losses, the Finance Ministry report shows:
- Total SOE losses declined by 2 percent year-on-year
This means some reforms may be slowly improving performance. However, the improvement is still very small compared to the total financial burden.
Profitable State-Owned Enterprises in FY25
Not all SOEs were in loss. Some major public companies generated profits.
Total Combined Profit:
- Rs. 709 billion
- But this was a 13 percent decline compared to last year
Most Profitable Entities:
- Oil and Gas Development Company Limited – Rs. 170 billion
- Pakistan Petroleum Limited – Rs. 90 billion
- National Bank of Pakistan – Rs. 57 billion
Energy and banking sectors remained strong contributors to profits.
Government Financial Support to SOEs
The report revealed massive government backing:
Direct Financial Support:
- Rs. 2,078 billion
Sovereign Guarantees Issued:
- Rs. 2,164 billion
This shows the government is heavily supporting SOEs to prevent collapse.
What Are Sovereign Guarantees?
Sovereign guarantees mean the government promises to repay loans if SOEs fail to do so. This increases:
- Fiscal risk
- Public debt burden
- Pressure on national budget
Economists warn that too much reliance on sovereign guarantees can hurt long-term economic stability.
Impact on Pakistan’s Economy
Heavy SOE losses affect the country in several ways:
1. Increased Public Debt
Government borrowing increases to support these companies.
2. Higher Taxes
Citizens may face higher taxes to cover losses.
3. Reduced Development Spending
Funds that could be used for health, education, and infrastructure go toward loss-making companies.
4. IMF Pressure
International lenders like the IMF often demand SOE reforms.
Privatization Debate in Pakistan
Due to rising losses, the government is considering privatization of some SOEs.
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Privatization may reduce financial burden but can also raise concerns about job losses.
Reasons Behind Continuous SOE Losses
Main causes include:
- Political interference
- Overstaffing
- Poor management
- Outdated technology
- Corruption allegations
- Inefficient pricing policies
Without structural reforms, losses may continue.
Government Reform Plans
The government is working on:
- Corporate governance reforms
- Performance monitoring
- Digitalization
- Public-private partnerships
- Debt restructuring
Experts believe reforms must be fast and transparent.
Future Outlook for Pakistan SOEs
The future depends on:
- Effective management reforms
- Reduction in circular debt
- Improved bill recovery
- Privatization decisions
- Fiscal discipline
If reforms succeed, SOEs can become profitable and reduce burden on taxpayers.
Conclusion
The Rs. 832.8 billion SOE losses in FY25 highlight serious financial challenges in Pakistan’s public sector. While there was a small 2 percent improvement compared to last year, the losses remain very high.
Major loss-making entities like NHA, power distribution companies, PIA, and Pakistan Railways continue to strain the national budget. At the same time, profitable companies like OGDCL and PPL provide some relief.
With over Rs. 2,078 billion in financial support and Rs. 2,164 billion in sovereign guarantees, the government’s fiscal exposure remains significant.
Structural reforms, better management, and accountability are urgently needed to improve the financial health of Pakistan’s State-Owned Enterprises.
