Islamabad: The financial performance of state-owned enterprises (SOEs) in Pakistan has sharply declined, causing concern over the effectiveness of promised reforms. Losses have escalated by nearly 300 percent, with cumulative net losses reaching Rs122.9 billion in FY2024-25, up from Rs30.6 billion the previous year.

According to Islamabad Chamber of Commerce and Industry, this dramatic increase highlights the failure of the reform narrative to deliver tangible results. Despite assurances of improvement, overall SOE revenues decreased by more than 10 percent to Rs12.4 trillion, and profit-generating entities saw a 13 percent decline in earnings to Rs710 billion. Loss-making enterprises experienced only a marginal two percent gain. SOEs required Rs2.1 trillion in fiscal support, mainly through equity injections to manage circular debt, diverting funds from development projects.

Shahid Rasheed Butt, a business leader and former president of the Islamabad Chamber of Commerce, attributed the losses to chronic inefficiencies in key entities like the National Highway Authority and power distribution companies. Electricity theft, technical losses, weak governance, and an ageing transmission network are significant issues, with heavy borrowing exacerbating financing costs and cash flow problems.

The repercussions are felt by the public, as budgetary support for SOEs intensifies fiscal pressures amid high inflation, potentially leading to increased taxes and reduced social spending. Inefficiencies in the power sector contribute to higher tariffs, impacting household and business expenses and reducing competitiveness. Rising energy costs are prompting small manufacturers to cut production and lay off workers.

Butt criticized the slow and fragmented progress on restructuring, despite repeated commitments under IMF-backed programs. He emphasized the need for stronger corporate governance, transparency, competitive market structures, and decisive action on privatization or closures to ensure meaningful reform. Without decisive execution, taxpayers will continue to bear the increasing burden of losses, he warned.

The post SOE Losses Surge 300 Percent as Reform Plans Falter appeared first on Pakistan Business News.