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Business Recorder
14 hours ago
- Business
- Business Recorder
State-Owned Enterprises: CCoSOEs concerned over staggering losses
ISLAMABAD: The Cabinet Committee on State-Owned Enterprises (CCoSOEs) on Friday noted with concern the staggering cumulative losses of SOEs amounting to Rs5.8 trillion, with Rs342 billion incurred in just the last six months—equating to a daily loss of Rs1.9 billion. The committee chaired by Federal Minister for Finance and Revenue Muhammad Aurangzeb emphasised that issues such as inefficiencies in DISCO operations, slow network upgrades by NTDC, unfunded pension liabilities, and low governance standards continue to erode fiscal space and undermine investor confidence. The chair also stressed the importance of timely reforms, particularly in the power and energy sectors where circular debt has crossed Rs4.9 trillion, and reiterated the government's resolve to bring greater transparency, financial discipline, and accountability to the SOE landscape. SOEs' performance: PM directs ministries, divisions to implement monitoring system The committee heard a detailed briefing from the Central Monitoring Unit of the Finance Division on a biannual report on the Federal SOE Performance covering the period from July 2024 to December 2024. The report included a detailed overview of the state of affairs and key challenges confronting SOEs, including cumulative losses amounting to Rs5.8 trillion, with Rs342 billion incurred in just six months. The committee was told that the circular debt in the oil, gas, and power sectors had crossed Rs4.9 trillion, severely affecting cash flows and asset valuations. The government's fiscal support to SOEs—through grants, subsidies, loans, and other injections—had also exceeded Rs600 billion in six months, equivalent to nearly 10 percent of total revenue receipts. In addition, unfunded pension liabilities in DISCOs and other SOEs, estimated at Rs1.7 trillion, remain off the books, as do railways' pension obligations, the meeting was told. It was also highlighted that government guarantees currently stand at Rs2.2 trillion, while rollover costs and financial restructuring liabilities further compound fiscal pressures. Governance concerns persist, with low levels of transparency in beneficial interest disclosures under IFRS Section 30 and other compliance gaps. The lack of strategic alignment in business plans and operational inefficiencies across SOEs were identified as critical areas requiring urgent reform. The chair also emphasised the directors representing the government on the boards of state-owned enterprises must exercise due diligence and play an active role in safeguarding the financial health and operational performance of these entities through informed and responsible input. During the meeting, separate summaries submitted by the Power Division for appointment of Chairman on the Quetta Electric Supply Company (QESCO) Board; constitution of the Board of Directors of the Independent System Market Operator (ISMO); appointment of Independent Director/Chairman on the Board of Gujranwala Electric Supply Company (GEPCO) and Independent Director on GENCO Holding Company Limited (GHCL), submitted by the Power Division; and nomination of Independent Directors on the Board of Multan Electric Power Company (MEPCO), Power Information Technology Company (PITC), and constitution of the Board of Energy Infrastructure Development and Management Company (EIDMC), were also discussed and approved. Additionally, a summary moved by the Ministry of Railways for winding up of three railway companies—RAILCOP, PRACS, and PRFTC was also discussed and approved. The finance minister stressed the importance of aligning business plans with national priorities and addressing operational challenges in a timely and coordinated manner. Aurangzeb reaffirmed the government's commitment to strengthening the governance, operational efficiency, and financial sustainability of key public sector entities. Federal Minister for Power Sardar Awais Ahmed Khan Leghari, Minister for Maritime Affairs Muhammad Junaid Anwar Chaudhry, Minister for Science and Technology Khalid Hussain Magsi, and senior officials from relevant ministries and divisions attended the meeting. Copyright Business Recorder, 2025
Express Tribune
19-06-2025
- Politics
- Express Tribune
12 exonerated in M6 case
The Accountability Court No1 Hyderabad, presided over by Judge Naseem Akhtar Soomro, has acquitted 12 accused from district Naushahro Feroze in the mega corruption reference related to the purchase of land for the Hyderabad-Sukkur Motorway (M-6). The reference involved over Rs5 billion in alleged corruptions. However, cases are still in progress against 30 suspects, including the axed deputy commissioners of Matiari and Naushehro Feroze districts, who are on the run after pocketing billions of rupees meant for buying land for the motorway. The court accepted the acquittal pleas filed by the accused and released them with honour after concluding that no evidence had been found against them during investigations conducted by NAB and the Anti-Corruption Establishment (ACE). The acquitted individuals include two former Mukhtiarkars, three clerks, three tapedars, and the former personal assistant (PA) of the ex-deputy commissioner of Naushehro Feroze. The decision was reserved after final arguments by the counsels and was issued yesterday in a two-page written judgment. The judgment stated that no incriminating material was found against the applicants during the investigations, and NAB's special prosecutor had also confirmed the absence of any evidence on record. The Anti-Corruption Establishment had initially investigated the alleged corruption in the land acquisition process and later transferred the case to NAB. The accused were acquitted under Section 265 of the Criminal Procedure Code (CPrC). Those acquitted include, Shafiq Ahmed Soomro (former Mukhtiarkar Mehrabpur), Niaz Ali Ajan, (former Mukhtiarkar Bhirya City), Abdul Aziz Ansari (former PA to DC Naushehro Feroze), Abdul Ghaffar Depar (former senior clerk), Ghulam Haqqani Sehto and Tanveer Ali Mallah (former tapedars), Rustam Khoso (former accounts clerk), Khalid Masood Channa (private contractor), Sajjad Ahmed Memon (former social welfare officer), Aftab Ahmed Soomro and Siraj Ahmed Memon (stamp vendors) and Abdul Ghaffar Marri (Notary Public). It is pertinent to mention that NAB had filed this reference in the accountability court in 2023, alleging Rs5.8 billion embezzlement in funds allocated for land acquisition for the M-6 Motorway in districts Matiari and Naushehro Feroze. The case included several government officials, private contractors, and individuals, with a total of 42 persons named as accused. While 12 have now been acquitted, the reference against the remaining 30 accused, including suspended DC Matiari Adnan Rasheed and absconding/suspended DC Naushehro Feroze Tashfeen Alam, is still under trial in Accountability Court No. 1.
Express Tribune
09-06-2025
- Business
- Express Tribune
Tax exemption costs jump to Rs5.8tr
In a surprising development, the government on Monday reported that the cost of tax exemptions has surged to a record Rs5.8 trillion in the current fiscal yeara surge of nearly Rs2 trillion in the first year of the present government, despite the withdrawal of many tax exemptions. In dollar terms, the cost of tax losses was $21 billionsubstantially higher than the $17 billion Pakistan is required to repay this year against its maturing commercial and bilateral external debt owed to China, Saudi Arabia, the United Arab Emirates, and Kuwait. The Economic Survey of Pakistan 2025, unveiled by Finance Minister Muhammad Aurangzeb on Monday, revealed that despite multiple rounds of withdrawing tax concessions and exemptions, the amount has continued to rise annually. These exemptions, approved over the years, are protected under three distinct tax laws. The survey showed that compared to the previous fiscal year's Rs3.9 trillion tax expenditure, the figure has jumped to Rs5.84 trillion this yearreflecting an increase of Rs1.96 trillion or 51%, despite the Pakistan Muslim League-Nawaz (PML-N) government removing several exemptions in its last budget. The reported Rs5.8 trillion in "tax expenditures for 2025" casts doubt on the credibility of previously published losses. Tax expenditure has continued to grow steadily despite efforts by successive governments to scale back or eliminate tax exemptions each year. This indicates either the introduction of numerous hidden tax exemptions during the fiscal year or that the prior year's figures were understated. There has been no extraordinary increase in economic activity to justify such a sharp spike in tax exemption costs. Finance Minister Muhammad Aurangzeb did not respond when asked about the reasons behind this sudden and substantial increase to Rs5.8 trillion in tax losses. A senior Federal Board of Revenue (FBR) official admitted that the Rs5.8 trillion figure may have been erroneously reported in the survey. He said the government plans to revise the number online by excluding the losses on account of petroleum products. The official also acknowledged that some tax losses were double-counted due to confusion over calculation methodology. However, he added that many of these exemptions were necessary or offset by other forms of taxation. For example, while the government incurred a cost of Rs1.8 trillion in forgone sales tax on petroleum products, it recovered more than Rs1 trillion by imposing a petroleum levy of Rs78 per litre. Sales tax The survey reported sales tax exemptions worth Rs4.3 trillion in the outgoing fiscal year, compared to Rs2.9 trillion in the previous yeara rise of nearly 50%. In absolute terms, the cost of sales tax exemptions jumped by Rs1.4 trillion, primarily due to exemptions on petroleum products, imported goods, and local supplies. Sales tax exemptions accounted for nearly three-quarters of total tax expenditure. During the outgoing fiscal year, the government maintained a 0% sales tax on petroleum products while charging a fixed petroleum levy of up to Rs78 per litre on petrol and diesel. According to the survey, the government forfeited Rs1.8 trillion in sales tax on petroleum products, up from Rs1.3 trillion last year. Additionally, Rs683 billion was lost due to exemptions on products covered under the Fifth Schedule of the Sales Tax Actrepresenting a phenomenal 232% increase over last year's Rs206 billion. The Fifth Schedule pertains to zero-rated items. The International Monetary Fund (IMF) has urged Pakistan to withdraw the remaining exemptions under this category. Sales tax exemptions granted under the Sixth Schedule cost Rs986 billion this year, up from Rs676 billion last year. These include Rs613 billion on local supplies and Rs373 billion on imports. The loss from local supplies rose by one-third despite the government imposing an 18% sales tax on various goods, including packaged milk, in the last budget. Exemptions provided under the Eighth Schedulewhich permits lower-than-standard 18% sales tax ratescost the government Rs618 billion, an increase of Rs259 billion or 75% over the previous year. The IMF is now asking that these reduced rates be raised to standard levels, or in cases where the rate is 5%, doubled to 10%. Sales tax exemptions on mobile phone sales cost Rs88 billionan increase of 166%. Exemptions from additional sales tax accounted for another Rs49 billion in losses. Income tax Income tax exemptions totalled Rs801 billion in the outgoing fiscal year, up 68% from Rs477 billion last year, according to the FBR's estimates. This increase came despite the government's decision to shift more tax burdens onto salaried individuals while sparing other blue-eyed sectors like retailers. The government itself benefited from Rs123 billion in income tax exemptions related to its income from various entitiesup 112%, or Rs58 billion, over the previous year. Income tax exemptions on allowances rose to Rs16.5 billionmore than double the previous year's figure. Exemptions for tax credits cost Rs101 billionup Rs75 billion over last year. Under the Second Schedule of the Income Tax Ordinance, Rs444 billion worth of total income exemptions were granted, reflecting a Rs150 billion or 51% increase. The IMF is now pressuring the government to reconsider these exemptions. Reductions in tax liabilities cost Rs65 billionsubstantially more than the previous year. Another Rs52 billion was lost due to exemptions from "specific provisions". Customs duty Customs duty exemptions increased to Rs786 billion this fiscal yearup Rs243 billion or 45% from Rs543 billion last year, the survey showed. The government lost Rs133 billion in customs duties due to concessions granted to the automobile sector, oil and gas exploration industry, and China-Pakistan Economic Corridor (CPEC) projects. Exemptions under the Fifth Schedule of the Customs Actcovering goods entirely exempted from customs dutiescost Rs380 billion, an increase of Rs189 billion over the prior year. The cost of import-related exemptions for exporters rose from Rs127 billion to Rs179 billion. Exemptions linked to free trade agreements also saw an increase from Rs44 billion to Rs61 billion.
