Government heads instruct ministries and divisions to establish oversight systems for state-owned enterprises' performance.
Rewritten Article:
Something's gotta give: PM Shehbaz Sharif takes a firm stand on sweeping reforms for State-Owned Enterprises
In a bid to put an end to the mounting financial and governance woes that have been plaguing Pakistan's State-Owned Enterprises (SOEs), the Prime Minister, Shehbaz Sharif, has taken a no-nonsense approach and issued a stern order for stricter monitoring and better oversight of these enterprises.
The financial year 2024 saw a 14.03% decrease in the losses incurred by Pakistan's SOEs compared to the previous year, with a total loss of Rs 851 billion. However, with a cumulative loss since 2014 reaching a whopping Rs 5.9 trillion, it's clear that something drastic needs to change.
Some of the biggest losses incurred during FY 2024 were reported by the NHA at Rs 295.5 billion, QESCO at Rs 120.4 billion, PESCO at Rs 88.7 billion, PIA at Rs 73.5 billion, Pakistan Railways at Rs 51.3 billion, SEPCO at Rs 37 billion, LESCO at Rs 34.5 billion, Pakistan Steel Mills Corp at Rs 31.1 billion, HESCO at Rs 22.1 billion, GENCO-II at Rs 17.6 billion, IESCO at Rs 15.8 billion, Pak Post Office at Rs 13.4 billion, TESCO at Rs 9.5 billion, GEPCO at Rs 8.5 billion, GENCO-III at Rs 7.8 billion, and all others cumulatively at Rs 23.7 billion.
In his letter to all secretaries of ministries/divisions, the Prime Minister's Advisor Dr Tauqeer Shah highlighted the Prime Minister's concern over the insufficient oversight by federal ministries over SOEs and statutory organizations under their jurisdiction. The lack of oversight has led to serious governance failures, such as violations of procurement rules, incidents of corruption, inaction against malpractice, operational inefficiencies, failure to manage prolonged litigation, and declining service delivery.
To address these issues, the Prime Minister has directed that Ministers-in-Charge and secretaries of concerned divisions exercise robust and continuous oversight over all organizations under their administrative control, including SOEs, autonomous bodies, and attached departments. Nominated representatives on Boards shall actively exercise their rights to support this oversight. Immediate and proactive measures shall be taken to address existing governance issues and prevent their recurrence.
Additionally, a system of pre- and post-briefings for Board meetings shall be instituted, with government representatives seeking proper instructions prior to attending Board meetings and providing timely reporting thereafter. The Prime Minister has also directed all ministers-in-charge to ensure the formulation of Key Performance Indicators (KPIs) and monitoring frameworks for each subordinate organization and SOE under their jurisdiction.
*SOEs post 14pc decrease in losses YoY*
In light of global best practices for financial and governance reforms in public enterprises, it's worth considering the adoption of performance-based financing (PBF), strategic purchasing, results monitoring, disbursement-linked indicators, real-time dashboards for SOE financial metrics, material impact metrics such as debt-to-equity ratios or operational efficiency, and multi-stakeholder oversight committees as potential governance tools for Pakistan’s SOEs.
In the face of such daunting figures, it's clear that bold and decisive action is required to turn the tide for Pakistan's SOEs and set them on a path to sustainable growth and financial viability.
Copyright Business Recorder, 2025
- The decreased losses incurred by State-Owned Enterprises (SOEs) in Pakistan's financial year 2024, by 14.03%, can be attributed to Prime Minister Shehbaz Sharif's firm stance on thorough monitoring and oversight of these enterprises.
- Despite the 14% decrease in losses, the cumulative loss of SOEs since 2014 has amounted to a staggering Rs 5.9 trillion, indicating the need for drastic reforms in the governance structure.
- The Prime Minister has urged Ministers-in-Charge and secretaries to exercise robust and continuous oversight over all organizations under their administrative control, including SOEs, and has highlighted the importance of nominating representatives on Boards to support this oversight.
- In Islamabad, the Prime Minister's Advisor Dr Tauqeer Shah has emphasized the inadequate oversight by federal ministries over SOEs, leading to serious governance failures, and has urged for immediate and proactive measures to address these issues.
- To enable sustainable growth and financial viability for SOEs, the Prime Minister has suggested implementing global best practices such as performance-based financing, real-time dashboards for financial metrics, and multi-stakeholder oversight committees, as potential governance tools.
