SOE Losses Surge Over 300% in FY25 as Net Losses Jump to Rs. 122.9 Billion

State-Owned Enterprises (SOEs) recorded a sharp surge in losses during FY 2024–25, with net losses rising by more than 300 percent, according to official figures presented to the Cabinet Committee on SOEs (CCoSOEs).

The data was shared during a meeting of the committee held on Friday under the chairmanship of Federal Minister for Finance and Revenue Muhammad Aurangzeb. Officials informed the committee that SOEs posted a net loss of Rs. 122.9 billion in FY25, compared to Rs. 30.6 billion in FY24, reflecting a year-on-year increase of 301.66 percent.

The committee was presented with the Annual Consolidated Performance Report for both commercial and non-commercial SOEs for FY 2024–25. The report was prepared by the Central Monitoring Unit (CMU) of the Finance Division and presented by Director General CMU Majid Soofi.

The presentation offered a comprehensive assessment of the SOE portfolio, covering financial and operational performance, government support, fiscal flows, contributions to the national exchequer, debt exposure, governance standards, compliance status, and reform priorities under the SOEs Act, 2023.

During FY25, total SOE revenues stood at approximately Rs. 12.4 trillion, marking a decline largely attributed to reduced profitability in the oil sector amid lower global oil prices. Aggregate profits of profit-making SOEs fell by 13 percent to Rs. 709.9 billion, down from Rs. 820.7 billion in the previous year.

Loss-making SOEs showed marginal improvement, with aggregate losses declining by around 2 percent to Rs. 832.8 billion. However, the overall sector still posted a significantly higher net loss due to persistent structural challenges.

Officials highlighted that losses remain concentrated among a limited number of entities, particularly in the transport and power distribution sectors. The National Highway Authority (NHA) and several power distribution companies continued to be major contributors, driven by inefficiencies, high financing and depreciation costs, and the non-commercial nature of certain public service obligations.

The committee was also briefed on the classification of SOEs into green, amber, and red categories based on financial sustainability to help guide reform efforts and policy decisions.

Government support to SOEs increased to Rs. 2,078 billion during FY25, primarily due to higher equity injections aimed at addressing circular debt. At the same time, inflows from SOEs to the government rose to Rs. 2,119 billion, supported by higher dividends, taxes, and interest payments.

Total SOE debt rose to Rs. 9.57 trillion, while unfunded pension liabilities were estimated at around Rs. 2 trillion, posing a significant long-term fiscal risk. Off-balance-sheet guarantees and contingencies were reported at Rs. 2.16 trillion.

The finance minister commended the CMU for improving transparency and consolidating SOE financial data on an IFRS-aligned basis, noting that enhanced oversight has strengthened fiscal risk assessment and policymaking.

While acknowledging progress, committee members emphasized the need for stricter audit enforcement, realistic business planning, governance reforms, and hard budget constraints for chronically loss-making entities. The committee approved the report for public release and directed that its findings be shared with relevant ministries to guide reform measures.

The meeting also approved the appointment of independent directors to several power and energy sector entities, including GEPCO, JPCL, EIDMC, ISMO, IESCO, and TESCO.

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