Power sector losses drag state-owned entities' profits

ISLAMABAD: The aggregate profitability of the state-owned entities (SOEs) contracted by 30 per cent in the first half of FY26 as their overall performance deteriorated across seven core areas, increasing fiscal and material macroeconomic risks to the sovereign state of Pakistan.

According to the July-December 2025 SOEs Monitoring Report, released on Monday by the Ministry of Finance, the power sector remains the weakest performer, but the aggregate loss profile of loss-making SOEs is estimated at about Rs2.8 billion per day, while fiscal support through subsidies, grants, loans, and equity injections has reached nearly Rs6.6bn per day. Power sector circular debt increased by Rs374bn, driven by inefficiencies and poor recoveries.

This is “equivalent to approximately 11pc of total federal budgetary receipts (on the six-month period)”, the MoF deplored, adding that “this persistent fiscal burden continues to crowd out developmental expenditure, compress fiscal flexibility, and weaken sovereign fiscal buffers”.

The broader SOE balance sheet also remains highly leveraged, with debt exposures exceeding Rs10tr, including about Rs2.5tr in foreign currency-denominated liabilities or Foreign Relent Loans (FRLs), exposing the sovereign to elevated exchange rate pass-through risk, refinancing pressure, imported sensitivity, and external account volatility.

Earnings fall 30pc as all performance indicators deteriorate

Earnings fall 30pc as all performance indicators deteriorate

Collectively, these risks indicate that Pakistan’s SOE sector is no longer merely a governance challenge, but a........

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