ISLAMABAD:
Finance Minister Muhammad Aurangzeb on Monday went on the back foot and blamed the media for “selective reading and reporting” of an official report on State-Owned Enterprises (SOEs), which disclosed that net cash returns by these entities dropped 91% and their net losses jumped 301%.
Instead of addressing a press conference, the finance minister issued a recorded video in which Aurangzeb claimed there had been “selective interpretation, reporting and selective reading of the report, which is contrary to the facts”.
But the finance minister did not quote a single fact in his over 12-minute video statement that was not given in the report and reported by the media.
The minister issued the video after the finance ministry on Friday released a detailed annual aggregate report on SOEs for the fiscal year 2024-25, which also disclosed that the SOEs’ finances and governance had deteriorated in the last fiscal year. “Aggregate losses have been decreasing over the last three consecutive years, said Aurangzeb. “In 2023, the aggregate losses were Rs905 billion, which declined to Rs851 billion in FY24, and last year it was Rs832 billion. So, if we see that over the last three years, the losses have declined by Rs74 billion,” he said.
The minister said losses were reduced by Rs823 per day over the past three years. Aurangzeb admitted that oil and gas sector profitability declined in the last fiscal year due to lower global oil prices, despite improved operations.
He said that aggregate and annual losses of state institutions have declined over the past three consecutive years.
All these entities have put a combined burden of Rs2.1 trillion on the government in the last fiscal year, he admitted, adding that last year the outflow from SOEs was about Rs2.078 trillion while the inflow was Rs2.119 trillion. “There is a positive inflow of Rs40 billion to the government of Pakistan,” he said.
According to the finance ministry, net cash returns by SOEs to the government dropped sharply by 91% to Rs40.7 billion. Net fiscal flow, calculated as the difference between SOE contributions to the government and fiscal support received through equity injections, grants, subsidies, loans and guarantees, declined dramatically.
The report said net fiscal flow fell from Rs458.2 billion in the previous fiscal year to just Rs40.7 billion in fiscal year 2025. “This sharp reduction highlights a substantial decline in the net cash returns provided by SOEs to the government,” it said.
According to the finance ministry, there was an overall net loss of Rs122.9 billion for the SOE sector, compared with a net loss of Rs30.6 billion in the previous year, translating into a 301% increase within one year instead of any improvement in financial performance.
Aurangzeb vowed full disclosure in aggregate SOE reports, including the provision of analytical analysis.
He said the government had taken steps to improve governance in these institutions by appointing independent private sector board members.
Although external audits are mandatory for SOEs, the report disclosed that less than 36% were implementing the requirement.
The finance minister said the government had asked for business plans from these SOEs, which are being evaluated at the central monitoring unit. But his ministry’s report disclosed that these business plans were “descriptive” and built on the hope of “positive outcomes” instead of preparing these plans on the basis of some analysis.
He said several institutions have already shut down or are in the process of closing. “These closures have been carried out transparently. The main issue with these entities was that they were receiving billions of rupees in subsidies, and there were problems of theft, leakage and corruption,” he said.
The finance minister claimed there are a few more entities in this category, and further decisions will be made on the overall rightsizing of the federal government
Many years ago, the government had handed over 26 entities to the Privatisation Commission for sale. So far, 75% stakes of PIA have been sold while one small bank has been sold under a negotiated sale.
“We will not stop at 26 SOEs; additional SOEs will gradually be handed over to the Privatisation Commission,” said Aurangzeb. “The privatisation of PIA was conducted transparently, and control will be transferred to private sector sponsors in April,” he said.
“The privatisation process of ZTBL (Zarai Taraqiati Bank Ltd) is at an advanced stage, and it will soon be presented to the Cabinet Committee on Privatisation. Similarly, HBFC is also being actively reviewed,” he said.
He said the financial advisors of the five power distribution companies were appointed and these entities would be sold during this year. It is the prime minister’s clear directive that the privatisation process should move forward with transparency and speed, he added.
