SOEs have become nearly unsustainable: Mian Zahid

KARACHI: President of the Pakistan Businessmen and Intellectuals Forum (PBIF) and All Karachi Industrial Alliance, Chairman of the National Business Group Pakistan and Chairman of the FPCCI Policy Advisory Board, Mian Zahid Hussain, has said that the recent losses of state-owned enterprises (SOEs) reflect a deep-rooted structural problem that demands urgent and sustained reforms. He said that a meeting of the Cabinet Committee on State-Owned Enterprises (CCoSOEs) was held in Islamabad on September 14, chaired by Federal Minister for Finance Senator Muhammad Aurangzeb, to review the performance of federal SOEs during the first half of FY2025-26. The Committee was informed that profitable SOEs generated Rs423. 3 billion during July-December 2025, while loss-making entities recorded aggregate losses of Rs342. 8 billion. Government support to all the SOEs stood at Rs804 billion, whereas these enterprises contributed Rs839 billion to the national exchequer, resulting in a net positive receipt of Rs35 billion for the government. Mian Zahid Hussain said that an analysis of the past 20-year trajectory reveals a highly alarming scale of financial burden. As of December 2025, the cumulative losses of the failed commercial SOEs have now surpassed Rs6. 5 trillion. In the 2000s, the annual aggregate loss ranged between Rs40 andRs90 billion, but with continuous increases, these failing entities are now losing approximately Rs2. 5 to Rs3 billion every single day. This persistent drain of national exchequer restricts the government’s ability to invest in essential public services and infrastructure. Ultimately, the heavy cost of this continuous wastage is borne by the business community and the public through heavy taxation and exorbitant utility bills. The veteran business leader pointed out that over the past two decades, successive governments have sustained these failing entities through direct budgetary subsidies, development grants, equity injections, and sovereign loan guarantees, the volume of which has exceeded Rs10 to Rs12 trillion. The total debt of SOEs, which stood at around Rs250 billion in FY2005-06, has multiplied 38 times to reach Rs9. 57 trillion by the first half of FY2025-26. This debt includes Rs2. 16 trillion in off-balance-sheet sovereign guarantees and over Rs2. 03 trillion in unfunded pension liabilities owed by entities like PIA, Pakistan Railways, and power distribution companies (DISCOs). Such an unproductive utilization of national capital is crowding out private sector borrowing, making it difficult to provide the capital required for industrial growth in Pakistan. Mian Zahid Hussain pointed out that over 85 percent of these long-term losses stem from the power sector DISCOs. The National Highway Authority (NHA) is weighed down by heavy non-performing loans, while Pakistan Railways are crippled by historical overstaffing and legacy commercial debt. Pakistan Steel Mills continues to swallow billions of rupees annually in maintenance and salaries, despite being closed since 2015, reflecting sheer administrative negligence. Mian Zahid Hussain observed that while progress on privatization represents a step forward, PIA – auctioned in December 2025 with management transferred in June 2026 – remains a glaring example of the heavy price paid for decades of delayed privatization. He pointed out that to make the airline commercially viable for private buyers, hundreds of billions of rupees in legacy commercial debt, accumulated liabilities, and unfunded pensions had to be parked into a state-backed holding company. Consequently, the national exchequer and the public are forced to continually share the financial consequences of past administrative negligence and delays. Mian Zahid Hussain specifically highlighted the government’s net portfolio position and noted that while profitable SOEs earned Rs423. 3 billion over sixmonths against Rs342. 8 billion lost by failing SOEs, the resulting surplus of Rs80. 5 billion rests on extremely vulnerable foundations. This surplus relies almost entirely on a handful of profitable entities, particularly oil and gas companies and financial institutions. Copyright Business Recorder, 2026

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