ISLAMABAD: The government’s semi-annual report on state-owned enterprises (SOEs) has revealed that the accumulated losses of several such entities since 2014 amount to Rs 5.9 trillion, News reported Saturday.
The report, aimed at complying with the International Monetary Fund (IMF) program, found that several state-owned enterprises suffered significant losses in the first six months of the 2024 financial year.
The largest loss was reported by the National Highway Authority (NHA) at Rs151.3 billion, followed by Qesco at Rs56.2 billion and Rs51.7 billion by Pakistan International Airlines (PIA).
Other notable entities reporting significant losses include Pesco, which reported a loss of Rs 39 billion, and Pakistan Railways, which reported a loss of Rs 23.6 billion. Other state-owned enterprises such as Sukkur Electric Supply Company (Sepco), Pakistan Steel Mills Corporation (Private) Limited and Islamabad Electric Supply Company (Iesco) also reported huge losses of Rs 20.9 billion, Rs 14.4 billion rupees and 12.1 billion rupees, respectively. .
The Central Power Generation Company Limited (Genco-II) reported a loss of Rs8.3 billion. Other loss-making entities include Pakistan Telecommunication Company Limited (PTCL) at Rs 7.7 billion, Pakistan Post at Rs 5.5 billion and several power supply companies like Hyderabad Electric Supply Company (Hesco) at Rs 5.5 billion. 2 billion rupees, Tribal Areas Electric Supply Company (Tesco). ) Rs 2.6 billion followed by Rs 4.6 billion SSGPL and Rs 2.1 billion USC contributed to the cumulative losses, illustrating the widespread inefficiencies and operational challenges within the public enterprise sector.
The 15 most profitable entities for the July-December half year 2023 demonstrated strong financial performance, with Oil and Gas Development Company Limited (OGDCL) leading with a profit of Rs 123.2 billion, followed by Pakistan Petroleum Limited (PPL ) with Rs68.7 billion, and National Power Parks Management with Rs36.2 billion. Other significant contributors include Pak-Arab Refinery Company (Parco) with Rs35 billion and Government Holdings (Private) Limited with Rs32.5 billion. Other profitable entities include National Bank of Pakistan (NBP) with Rs26.6 billion and Port Qasim Authority with Rs18.4 billion. However, despite these accounting profits, free cash flow remains low and WACC remains high.
Regarding the power sector, the report states that the state of business planning in various state-owned enterprises presents a series of challenges, particularly in the distribution companies (discoms), the National Transmission and Despatch Company (NTDC) and production companies (Gencos).
Each of these entities faces unique challenges related to ineffective loss reduction strategies, outdated infrastructure, ineffective debt management and working capital bottlenecks. Addressing these issues requires a mix of strategic, financial and operational reforms to stabilize the sector and improve its overall efficiency and sustainability.
In nightclubs, the financial implications of these losses are serious. Over a period of just six months, the average cost of this lost electricity amounts to around Rs140 billion, which directly impacts the operational liquidity and profitability of these companies.
This gap between the cost of purchased electricity and the revenue generated from its sale puts immense pressure on the already limited financial resources of nightclubs.
Furthermore, as these losses are not recovered through billing, they further widen the revenue gap in a sector already struggling with circular debt.
Discoms across Pakistan are facing severe transmission and distribution losses, averaging 10-15% of the electricity units they purchase from the Central Power Purchasing Agency (CPPA) through the NTDC. This means that for every 100 units of electricity purchased, nightclubs can only sell around 85 units, while the remaining 10-15 units are lost due to a combination of theft, technical inefficiencies and poor management.
These distribution losses represent a significant financial burden for nightclubs, further amplified by their already fragile financial situations.
The NTDC has fallen significantly behind schedule in upgrading its infrastructure, which is essential to ensuring a reliable electricity transmission network.
Current business plans fail to provide detailed strategies for infrastructure improvements, leading to frequent network outages, high transmission losses and significant delays in project completion.
These project delays not only hamper the company’s ability to meet critical deadlines, but also lead to cost overruns, loss of investor confidence and increased pressure on the entire electricity supply chain.
As a result, the overall reliability and stability of the national grid remains compromised, impacting economic growth and the development of various sectors dependent on constant electricity supply. NTDC’s failure to upgrade infrastructure and effectively manage project delays is having a cascading effect on Pakistan’s energy sector, contributing to power shortages and rising operating costs.