Finance Division says profitable entities earned Rs423bn in H1

September 16, 2026 (MLN): The Finance Division has clarified that the decline in net fiscal flows from State-Owned Enterprises (SOEs) should not be interpreted as a deterioration in their financial performance, noting that fiscal flows and SOE profitability are distinct measures.

During the first half of FY2025-26, profitable SOEs generated aggregate profits of Rs423.3 billion, while loss-making entities recorded combined losses of Rs342.8 billion, according to the Finance Division.

The government also received Rs839.8bn in inflows from SOEs against outflows of Rs804bn, resulting in a positive net fiscal flow of Rs35.8bn during the period.

The Finance Division said the increase in government outflows was driven significantly by equity injections and financing linked to restructuring and circular-debt management.

Meanwhile, dividends received from SOEs increased 26% during the period, while their tax contributions rose 10%.

The Finance Division stressed that net fiscal flow primarily reflects transactions between the government and SOEs, including government support, taxes, dividends, levies and other payments, whereas financial performance is assessed through profitability and other financial and operational indicators.

It said evaluating SOE reforms solely through a six-month comparison of fiscal flows overlooks structural measures already under implementation.

Utility Stores Corporation has ceased operations, Pakistan Agricultural Storage and Services Corporation is being wound up, while First Women Bank Limited and Pakistan International Airlines have been privatised.

In the power sector, nine distribution companies are included in the privatisation programme and are at various stages of the transaction process.

These include Faisalabad Electric Supply Company, Gujranwala Electric Power Company, Islamabad Electric Supply Company, Lahore Electric Supply Company, Multan Electric Power Company, Hyderabad Electric Supply Company, Sukkur Electric Power Company, Peshawar Electric Supply Company and Hazara Electric Supply Company.

The government is also pursuing broader restructuring and privatisation measures across the SOE portfolio, alongside governance reforms aimed at strengthening independent and professional boards, business-plan accountability and performance monitoring.

The Finance Division said the reform process is aimed at reducing the size of the SOE footprint, improving commercial discipline and transparency, and lowering fiscal risks associated with underperforming state entities.

The government remains cognisant of challenges within parts of the SOE portfolio and is addressing individual entities through restructuring, closure, privatisation and enhanced performance management, based on their respective circumstances.

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