The good old PTV was under fire this week when the Senate was recently informed that the state-owned national television was running into financial loses to the tune of Rs5.8 billion per annum. These losses aren’t as huge as archetypical public sector enterprises (PSEs) such as the PIA or the Pakistan Steel Mills that successfully managed to produce losses of Rs45 and Rs18 billion, respectively in FY16. But since it may eventually boil down to losing taxpayers’ money, the entity deserves to be put under the spotlight.
First off, the exact quantum of PTV’s losses is uncertain. The Senate was informed that PTV’s losses ran to the tune of RS5.8 billion. But if the last published report titled ‘Federal footprint: SOE annual report’ published by the Finance Ministry’s (FinMin) Economic Reform Unit (ERU) is any guide, the losses were actually Rs1.6 billion in FY16 and about Rs650 million in FY17. Whether the Rs5.8 billion number pertains to the fiscal year 2018, then surely the matters have worsened at a much faster pace than recent trends would have made believe.
An alternate explanation could be the that either of loss numbers – Rs5.8 billion given to the Senate or Rs649 million reported in FinMin’s report – are factually incorrect. One can only hope that between the two, the upper house was not the one that was misinformed. That would be absolutely unacceptable since the Senate being the upper body of bicameral public representation structure in Pakistan demands highest level of respect.
But if the Senate has been given the correct picture, that would mean that the data collected by FinMin’s ERU is questionable, which also perhaps means that PIA and PSM losses may also be under or over reported. The Finance Minister Asad Umar would do well to give more powers to the ERU so they can improve their data collection methodology from the public sector enterprises. At present, the ERU has no option but to accept whatever data has been provided by the various PSEs.
The SECP also needs to be given wrap on the knuckles to ensure that the corporate governance and financial reporting guidelines are strictly followed. The PTV is after all a SECP-registered company, obliged to follow the companies’ law regulations.
On that note it is pertinent to highlight that according to FinMin ERU’s reports on PSEs, PTV’s income statement did not even have the basic accounting head of ‘cost of sales’, and all the expenses were classified as ‘operating expenses’. Exactly what kind of accounting practices are being followed at the PTV is beyond imagination?
Lastly, for a terrestrial channel with a far and wide reach across the country, PTV’s ad revenues are arguably very low. According to FinMin’s report, PTV booked total revenues of Rs9.5 billion in FY16. The FinMin report does not provide the breakup of PTV’s revenues, but usually private sector electronic media houses have various sources of revenues such as advertising revenue, production revenues, subscription revenues, digital revenues, film distribution and so forth. The PTV has an additional revenue source earned through the TV license fee.
Technically, according to a December-2018 National Assembly hearing, the television license fee is a government tax/levy, which is not related to PTV but it is charged for the possession of a TV set. “As PTV under takes multiple tasks pertaining to national interests, which are not commercially viable and have huge financial implications. Therefore, against that expenditure, the government of Pakistan has permitted PTV to collect TV License fee through electricity bills as an agent for the Government,” the NA was told. These commercially non-viable spending by the PTV includes, for example, spending boosters in far flung areas or running non-commercial channels like AJK-TV and PTV parliament.
For the moment, ignore the debate over whether the government should be parking the fees collected for non-commercial projects such as boosters, under the accounting heads of a SECP-registered commercial entity. The fact of the matter is that despite having the monopoly on terrestrial broadcasting with a wide ranging of channels, PTV’s advertisement revenue was less than Rs2 billion in FY18 whereas some private channels are earning Rs3-4 billion per year.
There are around 30 million consumers of electricity in Pakistan. While the share in power consumption by each sector (domestic, commercial & industrial) is known, the number of consumers across these sectors is not publicly available.
But even if one assumes very conservative estimate of 20 million domestic consumers in FY17, it effectively means that in FY17, the PTV earned Rs8.4 billion through license fees (Rs35/monthly bill times12). In other words, if it weren’t for the license fees, collected in withholding mode, PTV’s losses would have run into billions every year.
In the light of details, one hopes the parliament would do a detailed grilling next time around.
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