Latest news with #SOEs
Express Tribune
12 hours ago
- Business
- Express Tribune
Govt admits poor SOE governance
The government's fiscal support to SOEs – through grants, subsidies, loans and other injections – exceeded Rs600 billion in six months, equivalent to nearly 10% of total revenue receipts. photo: FILE Listen to article In a rare statement, a cabinet body on Friday admitted that poor governance concerns persisted with low transparency in government-owned companies while their cumulative losses increased further to a record Rs5.9 trillion by December last year. The statement issued by the Ministry of Finance after a meeting of the Cabinet Committee on State-Owned Enterprises (CCoSOEs) appeared to be a serious charge sheet about the poor performance of SOEs during the July-December 2024 period of the current fiscal year, particularly the power sector performance. The energy-sector circular debt, comprising power and gas, jumped to Rs4.9 trillion by December last year. "Governance concerns persist, with low levels of transparency in beneficial interest disclosures under Section 30 (of the SOEs Act) and other compliance gaps," stated the Ministry of Finance. Finance Minister Muhammad Aurangzeb chaired the meeting. The statement added that "the lack of strategic alignment in business plans and operational inefficiencies across SOEs were identified as critical areas requiring urgent reforms". Muhammad Aurangzeb reaffirmed the government's commitment to strengthening the governance, operational efficiency and financial sustainability of key public sector entities, it said. The finance minister stressed the importance of aligning business plans with national priorities and addressing operational challenges in a timely and coordinated manner. The cabinet committee reviewed the performance of government entities during the first half of current fiscal year, which also coincided with the first year of the government of Prime Minister Shehbaz Sharif. "The cabinet committee noted with concern the staggering cumulative losses of SOEs amounting to Rs5.8 trillion," said the finance ministry. It added that Rs342 billion in additional losses were incurred in just the last six months - equating to a daily loss of Rs1.9 billion. Aurangzeb "emphasised that issues such as inefficiencies in DISCOs' (distribution companies) operations, slow network upgrades by National Transmission and Despatch Company, unfunded pension liabilities and low governance standards continue to erode fiscal space and undermine investor confidence". The finance minister stressed the importance of timely reforms, particularly in power and energy sectors, where circular debt has crossed Rs4.9 trillion, it added. The government reiterated the resolve to bring greater transparency, financial discipline and accountability to the SOE landscape. The finance ministry said that the Central Monitoring Unit gave a detailed briefing on a biannual report on the federal SOE performance covering the period from July to December 2024. The report included a detailed overview of the state of affairs and key challenges confronting state-owned enterprises, including cumulative losses amounting to Rs5.8 trillion, with Rs342 billion being incurred in just six months. The committee was told that circular debt in oil, gas and power sectors 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 – also exceeded Rs600 billion in six months, equivalent to nearly 10% of total revenue receipts. In addition, unfunded pension liabilities in DISCOs and other SOEs, estimated at Rs1.7 trillion, remain off the books, as in the case of railways' pension obligations, the meeting was told. It was highlighted that government guarantees currently stood at Rs2.2 trillion, while rollover costs and financial restructuring liabilities further compound fiscal pressures. The finance minister emphasised that directors representing the government on boards of SOEs must exercise due diligence and play an active role in safeguarding the financial health and operational performance of the entities through informed and responsible input. In a recent meeting of the National Assembly Standing Committee on Finance, Muhammad Aurangzeb said that government nominees on SOE boards were performing below requirements and they needed to pull their socks up. The cabinet committee also approved new nominees on various boards. It approved the appointment of chairman of the Quetta Electric Supply Company (Qesco) board, constitution of the board of directors of the Independent System Market Operator, appointment of independent director/chairman on the board of Gujranwala Electric Power Company (Gepco) and independent director on Genco Holding Company Limited (GHCL). It approved the nomination of independent directors on the board of Multan Electric Power Company (Mepco), Power Information Technology Company and the constitution of the board of Energy Infrastructure Development and Management Company. The cabinet body approved the winding up of three subsidiaries of the Ministry of Railways, which included RAILCOP, PRACS and PRFTC.
Business Recorder
13 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
Business Recorder
3 days ago
- Business
- Business Recorder
Executive Risk Management Forum held for SOEs, listed firms at PSX
ISLAMABAD: FAMCO Associates of Pakistan and TransVare Corporation of USA collaboratively organized an Executive Risk Management Forum for State-Owned Enterprises (SOEs) and publicly listed companies at the Pakistan Stock Exchange (PSX). Over fifty CEOs, CFOs and Directors from public and private-sector were present in the country's first-of-its-kind event that provided an opportunity to align with IMF-mandated ERM requirements on the subject and SOEs guidelines. Ahmed Chinoy, Director PSX, informed that collective losses of SOEs in Pakistan clocked at Rs 851 billion the fiscal year 2024 as the exclusive event brought together senior leaders and C-level Risk Management Executives from across Pakistan to explore the potential benefits of the digital transformation of Enterprise Risk Management (ERM) and internal control & audit by leveraging a comprehensive suite of innovative tools developed by TransVare Corporation. This transformation aims to enhance risk visibility and allowing organizations to gain real-time insights into their risk exposures, which facilitates proactive decision-making. By automating key processes, these tools streamline internal audit functions and risk assessments, thereby increasing accuracy and reducing manual efforts. Additionally, they improve compliance tracking and reporting, ensuring alignment with regulatory standards such as the SOE Governance Framework, COSO and ISO31000. The advanced analytics capabilities offered by the tools, enable organizations to analyze large datasets for identifying trends and deriving actionable insights, while fostering collaboration and communication across teams for effective risk management. Furthermore, these solutions provide scalability and flexibility, allowing organizations to adapt their risk management strategies as they grow, ultimately leading to cost efficiencies and a stronger foundation for sustainability and success in an ever-evolving business landscape. Digital transformation of ERM and internal audit session provided actionable insights on tool journey in alignment with global standards. Ahmed Chinoy emphasized the critical importance of internal audit in the context of Enterprise Risk Management – particularly among State-Owned Enterprises and listed companies. Copyright Business Recorder, 2025
South China Morning Post
20-06-2025
- Business
- South China Morning Post
Word is bonds: China's provinces use special-purpose funds to pay debts
Hunan has become the first province in China to use the proceeds of special-purpose bonds to guarantee government payments to enterprises, with 20 billion yuan (US$2.78 billion) allocated for this year. The inland province made the adjustment to its annual fiscal budget last month, marking the first time the bonds – typically earmarked for revenue-generating construction projects – will be used to cover government arrears. Proceeds will be distributed based on eligible outstanding debts from existing investment projects, according to a statement from the province's department of finance issued last week. The department said the disbursements will be prioritised to help cities and counties across Hunan complete ongoing construction, clear their obligations and reduce fiscal risk. David Wong, a lecturer at Hang Seng University in Hong Kong, called the move 'a step in the right direction,' but warned that the 20-billion-yuan sum could be 'a drop in the bucket' compared with the scale of local government debt 'It remains unclear which arrears will be prioritised or which firms will actually receive payments,' he said. 'The more complex issue is that this is not simply a matter of 'government owing enterprises' but a complex web of entangled triangular debts.' Criss-crossing chains of obligation make the repayment picture opaque for a number of localities, Wong said. 'In many cases, local governments have indirectly incurred debts through state-owned enterprises (SOEs), which in turn owe money to each other. Some SOEs are involved in circular guarantees and cross-debt relationships with both local governments and private companies.'
Business Recorder
18-06-2025
- Business
- Business Recorder
‘Pakistan confronting significant economic challenges due to SOEs' financial performance'
ISLAMABAD: Prominent international governance risk expert, Muhammad Ghazali Aqeeq, has stressed that Pakistan is confronting significant economic challenges due to the financial performance of state-owned enterprises (SOEs). In the fiscal year 2024-2025, these entities reported a staggering combined loss of Rs 851 billion—a figure that, while reflecting a 14.03% decrease from the previous year, underscores the urgent need for effective management practices, he added. Therefore, the implementation of Enterprise Risk Management (ERM) and Internal Audit Management has become essential for Pakistan. Aqeeq maintained that the recent report from the Ministry of Finance highlights the precarious financial situation of SOEs in Pakistan. The net loss of Rs 851 billion represents a significant burden on the national economy – reflecting ongoing issues such as mismanagement, operational inefficiencies and poor governance. While, the decrease in losses is a positive sign, the persistent financial challenges reveal the necessity for systemic reforms, he added. In light of these circumstances, the International Monetary Fund (IMF) has strongly advocated the adoption of ERM and Internal Audit Management frameworks within SOEs of Pakistan. These practices are not merely recommendations: they are essential for ensuring accountability, transparency and operational efficiency. Muhammad Ghazali Aqeeq, who is also the founder of Transvare Corporation, explained that the implementation of ERM allows SOEs to adopt a proactive approach to risk management – systematically identifying and mitigating potential risks that could impact financial performance. By embedding risk management into their operations, SOEs can better safeguard public resources and enhance their resilience against economic shocks. Internal Audit Management plays a complementary role by providing independent assessments of the effectiveness of risk management practices and internal controls. This oversight ensures that financial operations are conducted transparently and that any irregularities are promptly addressed. Together, these frameworks create a robust governance structure that is crucial for restoring public trust in SOEs. By aligning with international best practices, Pakistan can enhance its appeal to investors and stakeholders – promoting economic stability and growth, he added. Ghazali Aqeeq elaborated that in an increasingly complex financial landscape, the need for digitally transformed ERM and Internal Audit Management tools is more pressing than ever – especially for SOEs while we are operating under IMF programs. Digital solutions offer a myriad of benefits that can significantly enhance the effectiveness of risk management and auditing processes. Muhammad Ghazali Aqeeq highlighted that, as Pakistan grapples with the financial challenges posed by its state-owned enterprises, the implementation of Enterprise Risk Management and Internal Audit Management is not just beneficial—it is indispensable. With a reported loss of Rs 851 billion in the fiscal year 2024-2025, the need for effective governance and accountability within SOEs has never been more urgent. By adopting robust ERM frameworks and leveraging digitally transformed tools, Pakistan's SOEs can enhance their operational efficiency, combat financial misuse and ultimately contribute to the country's economic recovery. Copyright Business Recorder, 2025
