SOEs have become nearly unsustainable: Mian Zahid

Mian Zahid Hussain, a prominent Pakistani businessman, has highlighted the unsustainable nature of state-owned enterprises (SOEs) in Pakistan. During a recent Cabinet Committee on State-Owned Enterprises meeting, it was revealed that SOEs generated Rs423.3 billion in profits while others incurred losses of Rs342.8 billion. The government's support to these enterprises amounted to Rs804 billion, yet they contributed Rs839 billion to the national revenue, resulting in a net positive gain of Rs35 billion for the government.

Mian Zahid emphasized that the past two decades have seen a substantial financial burden on the nation due to SOEs. As of December 2025, cumulative losses of failed commercial SOEs exceeded Rs6.5 trillion, with the entities now losing Rs2.5 to Rs3 billion daily. The government has sustained these failing entities through subsidies, grants, equity injections, and loan guarantees, with the total expenditure surpassing Rs10-12 trillion.

Additionally, the SOEs' debt has multiplied 38 times, reaching Rs9.57 trillion, with a significant portion attributed to off-balance-sheet guarantees and unfunded pension liabilities.

The power sector's DISCOs account for over 85% of long-term losses, while the National Highway Authority and Pakistan Railways face challenges due to non-performing loans and legacy commercial debt. Pakistan Steel Mills, despite being closed since 2015, continues to drain resources annually. Mian Zahid noted that privatization progress is a step forward, but the Public Investment Authority (PIA) remains a case study of delayed privatization's consequences.

To make PIA commercially viable, billions of rupees in legacy debt and unfunded pensions were transferred to a state-backed holding company, placing a financial burden on the government and public.

While profitable SOEs like oil and gas companies and financial institutions contributed Rs423.3 billion over six months, the surplus of Rs80.5 billion relies on a few entities. Mian Zahid stressed that the government's net portfolio position, anchored on vulnerable foundations, underscores the need for urgent and sustained reforms to address the unsustainable SOEs' impact on Pakistan's economy.