Govt pledges reforms for State-Owned Enterprises

June 27, 2025 (MLN): The government has reaffirmed its commitment to strengthening the governance, operational efficiency, and financial sustainability of key public sector entities.

This was stated by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb while chairing a meeting of the Cabinet Committee on State-Owned Enterprises (CCoSOEs).

During the meeting, the Finance Minister emphasized the need to align business plans with national priorities and address operational challenges in a timely and coordinated manner.

The session was attended by Federal Minister for Power Sardar Awais Ahmed Khan Leghari, Minister for Maritime Affairs Muhammad Junaid Anwar Chaudhry, Minister for Science and Technology Khalid Hussain Magsi, and senior officials from relevant ministries and divisions.

The Committee received a detailed briefing from the Central Monitoring Unit of the Finance Division on the biannual report covering SOE performance from July to December 2024.

The report revealed cumulative SOE losses of Rs5.8 trillion, with Rs342 billion incurred in the last six months alone translating to daily losses of Rs1.9bn.

The briefing also noted that circular debt in the oil, gas, and power sectors has crossed Rs4.9tr, significantly impacting cash flows and asset valuations.

Meanwhile, fiscal support to SOEs including grants, subsidies, loans, and other injections exceeded Rs600bn in six months, nearly 10% of total revenue receipts.

Unfunded pension liabilities in DISCOs and other SOEs were reported at Rs1.7tr, excluding railways’ pension obligations.

Government guarantees now stand at Rs2.2tr, while rollover costs and financial restructuring liabilities are adding further fiscal pressure.

The meeting highlighted persistent governance concerns, including poor transparency in beneficial interest disclosures under IFRS Section 30 and other compliance gaps.

Operational inefficiencies and a lack of strategic alignment in SOE business plans were also identified as urgent issues needing reform.

The Cabinet Committee expressed concern over the staggering financial losses and reiterated the need for reforms, particularly in the power and energy sectors.

The Finance Minister stressed that inefficiencies in DISCO operations, slow network upgrades by NTDC, and weak governance standards continue to strain fiscal space and deter investor confidence, as per the press release issued today.

He underscored the need for directors representing the government on SOE boards to exercise due diligence and actively contribute to improving financial and operational performance through informed and responsible oversight.

The Committee also discussed and approved several summaries, including the appointment of a Chairman for Quetta Electric Supply Company (QESCO) and the constitution of the Board of Directors for the Independent System Market Operator (ISMO).

Appointments to the boards of Gujranwala Electric Supply Company (GEPCO), GENCO Holding Company Limited (GHCL), Multan Electric Power Company (MEPCO), Power Information Technology Company (PITC), and Energy Infrastructure Development and Management Company (EIDMC) were also approved.

Additionally, the Committee approved a summary from the Ministry of Railways regarding the winding up of three railway companies RAILCOP, PRACS, and PRFTC.

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