ISLAMABAD   -   Public sector enterprises (PSEs) have eaten up almost Rs400 billion in just one year after the successive governments failed to improve the ailing PSEs including Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM).

The debt and liabilities of PSEs including domestic and foreign had gone up to Rs1.59 trillion by end of March, which is 33.14 percent higher than the corresponding period of the previous year. In absolute term, the debt and liabilities of PSEs has enhanced by Rs396.6 in one year. The break-up of Rs1.59 trillion showed that debt of the PSEs stood at Rs1.38 billion and liabilities at Rs214.9 billion.

According to the official figures, PIA’s debt has increased to Rs156.9 billion at the end of March 2019 as compared to Rs148.1 billion of March 2018. The PIA still needs billions of rupees to meet its expenses as well as to get new airplanes on lease. The PIA has been facing Rs4 billion in monthly revenue losses along with Rs1.5 billion in average interest payment monthly.

Debt of Pakistan Steel Mills remained at Rs43.2 billion. The PSM was forced to shut down in July 2015 due to the many reasons. Similarly, the total losses and liabilities of the PSM have gone beyond Rs480 billion by January. However, debt of Water and Power Development Authority (Wapda) recorded a decline of 29 percent in last year. The debt of Wapda has declined to Rs88 billion in March 2019 from Rs124.2 billion same month of the previous year. Oil and Gas Development Corporation (OGDC)’s debt was recorded at Rs5.5 billion by end of March 2019. Meanwhile, debt of other PSEs has swelled Rs1084.8 billion at the end of March 2019 as compared to Rs677.4billion of the March 2018.

The previous government tried to get rid of some large public entities – Pakistan International Airline (PIA) and Pakistan Steel Mills (PSM) – but failed mainly due to resistance from opposition parties in the parliament. The privatisation of PIA and PSM has been extremely difficult for all previous governments despite the fact that the national carrier is being run on taxpayers’ money while the PSM has already become un-operational. The divestment of these two PSEs will render thousands jobless.

The newly elected government has also expressed its willingness to sell loss-making PSEs but it is likely to face similar hostility. The Securities and Exchange Commission of Pakistan (SECP) had incorporated Sarmaya-e-Pakistan, the holding company for state owned enterprises.

The government has planned to set up Sarmaya-e-Pakistan with capital injection of Rs500 billion in a bid to take over management control and have better oversight of all public sector companies, which will likely lead to a turnaround in the performance of loss-incurring firms.  The new company will be incorporated with 100% federal government shareholding. Government shares in existing public-sector companies will be gradually transferred to the new firm. According to the plan, nominations for the board of directors of all state-owned enterprises will be made by the board of Sarmayae-Pakistan.