The Annual Report on federal State-Owned Enterprises (SOEs) has recently been released for 2024-25 by the Central Monitoring Unit (CMU) in the Ministry of Finance. This is very useful and timely report and quantifies the key indicators at the overall, sectoral and individual SOE levels.
The first estimate is the overall size of the SOEs and their role in the national economy. These SOEs are operating in major sectors including finance, oil and gas, power, infrastructure and transport, manufacturing and mining.
The report has looked at the finances of 157 independent companies and subsidiaries. The total revenues are estimated at Rs 11,700 billion in 2024-25, implying a contraction from Rs 12,784 billion in 2023-24.
The biggest decline in sales is observed of Rs 684 billion in the SOEs in the oil sector, because of the fall in prices during 2024-25. Revenues have fallen by almost 5 percent of SOEs in the power sector. The financial SOEs have shown significant growth of over 12 percent.
There has also been a decline in profits by 13 percent. Profit-making SOEs like OGDC, PPL, NBP and WAPDA account for 52 percent of the profits. The estimated total profit of profitable SOEs is Rs 710 billion in 2024-25, compared to Rs 821 billion in 2023-24.
The major loss-making SOEs are the NHA, DISCOs and the Pakistan Railway, with losses respectively of Rs 295 billion, Rs 205 billion and Rs 60 billion. The total loss of loss-making SOEs is Rs 832 billion, showing a small decline of Rs 19 billion from the losses in 2023-24.
The implied overall financial position is a net loss of Rs 123 billion in 2024-25, as compared to Rs 30 billion in 2023-24.
There is a need to get a measure of performance in the economic role played by SOEs in Pakistan. One indicator is the share of SOEs in employment. It is estimated at 11 percent of the non-agricultural employment in Pakistan, according to the ILO. This is significantly higher than the share of employment in SOEs in Bangladesh of 7 percent. However, it is lower than the share in Sri Lanka of 25 percent. The total employment in SOEs in Pakistan is close to 6 million.
A key set of indicators relates to the fiscal implications of the SOEs on the budgetary position of the federal government. There is a very high level of fiscal support to SOEs, aggregating to Rs 2075 billion in 2024-25. It includes equity injections of Rs 729 billion, loans to SOEs of Rs 354 billion, grants of Rs 269 billion and subsidies of Rs 723 billion.
As opposed to this, the financial contribution by SOEs is estimated at Rs 2119 billion in 2024-25. This includes dividends of Rs 150 billion, tax revenues of Rs 436 billion, non-tax revenues, including the petroleum levy, of Rs 1264 billion and interest payments of Rs 268 billion.
Overall, there was a net financing contribution by SOEs to public finances in 2024-25 of Rs 41 billion. This represents a big fall from the contribution of Rs 458 billion in 2023-24. The largest fiscal support provided is to SOEs in the power sector. Therefore, there is clear evidence that SOEs combined are imposing a significant liability on the federal government. Fortunately, following the privatization of PIA there should be a significant reduction of Rs 70 billion or more in the overall losses of SOEs.
There has been an evaluation of the performance of SOEs in different countries by the World Bank in its Country Policy and Institutional Reports. The public sector management and institutions of Pakistan have also been subjected to this evaluation.
The rating scale in the evaluation is a rising one from 1 to 6. Pakistan gets an intermediate level of rating of 3.2 in public sector management and 3.0 in transparency, accountability, and corruption in the public sector. Therefore, there exists substantial scope for improvement in the performance of SOEs in Pakistan.
The federal government has made a serious commitment to improvement in the performance of SOEs as part of the ongoing IMF Program. This includes efforts at scaling down the state’s footprint by ensuring coverage of all SOEs in the SOE governance framework, adopting safeguards for the Sovereign Wealth Fund and completing a review of the rationale and purpose of various SOEs.
The privatization agenda has been advanced and includes the initiation of the privatization process of 15 SOEs in the 2024-29 privatization programme and liquidation of 3 SOEs. PIA has been privatized. Steps are being taken to privatize the Roosevelt Hotel and the First Women Bank.
The second review mission report of the IMF emphasises in the structural benchmarks the completion of policy actions needed to prepare two DISCOs for privatization and concession transactions. Further, the expectation is that 10 more SOEs will be brought in line with the SOE act.
Overall, the SOEs are playing a significant role in some key sectors of the national economy. Their performance rating is of an intermediate nature and ought to be improved. The fiscal burden imposed on the federal budget needs to be significantly reduced. SOEs, which qualify under various criteria for privatization, should be brought into this process on a priority basis.
Copyright Business Recorder, 2026
The writer is Professor Emeritus at BNU and former Federal Minister
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