ISLAMABAD: Criminal corruption and incompetence in at least eight public sector enterprises (PSEs) have gobbled down approximately Rs1,500 billion in taxpayersí money in a mere 48-month time span, The News shockingly learnt Monday.
Moreover, the losses figure is expected to cross the Rs2,000 billion mark by the end of the year, according to reliable sources.The unprecedented spike in losses ñ an accumulated consequence of brazen corruption and gross incompetence ñ is being blamed on the present government’s penchant for appointing lackeys and cronies to key posts in these public sector companies.
An official report on the financial losses and profits of at least eight PSEs available with The News including the power sector (Pepco), Pakistan Railways (PR), Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM), Utility Stores Corporation (USC), Trading Corporation of Pakistan (TCP), Pakistan Agricultural Storage & Supplies Corporation (Passco) as well as the National Highway Authority (NHA), revealed that during the period 2007-08 to 2010-11, major losses incurred on account of power subsidies in all shapes amount to the tune of Rs1,100 billion.
While the remaining PSEs have caused financial losses of Rs400 billion during the last four years, the report states that TCP and USC were profit making enterprises in the public sector during this period. Total losses of PSEs stood at Rs86.7 billion during the 2007-08 fiscal year with major loss incurred to PIA to the tune of Rs36.1 billion, Pakistan Railways Rs16.9 billion, Passco Rs3.4 billion and NHA Rs33.5 billion. Meanwhile, the profits earned by USC and TCP stood at Rs2.1 billion Rs1.1 billion respectively in 2007-08. However, the losses of PSM for 2007-08 are not available in the official report.
The losses of PSEs skyrocketed up to Rs90.8 billion in 2008-09 with a major burden on the national kitty because of losses faced by the Pakistan Steel Mills amounting to the tune of Rs26.5 billion, NHA Rs35.3 billion, Pakistan Railways Rs23 billion, PIA Rs4.9 billion and Passco Rs3.3 billion. The profits earned by USC stood at Rs0.5 billion and TCP Rs0.8 billion during fiscal year 2008-09.
The subsidies to PSEs consumed Rs90.8 billion in the 2009-10 fiscal year with major losses incurred by the NHA at Rs44.4 billion, Pakistan Railways Rs25 billion, PIA Rs20 billion, PSM Rs11.5 billion and Passco Rs13.8 billion. The profits earned by USC and TCP were Rs0.7 billion Rs1.6 billion respectively in 2009-10.
The losses of PSEs touched Rs101 billion in the 2010-11fiscal year as the financial burden of Pakistan Railways had eaten up approximately Rs31.1 billion of taxpayersí money. PIA losses in the first nine months of 2010-11 stood at Rs19.3 billion, PSM Rs11.5 billion, Passco Rs14.1 billion and NHA Rs36.5 billion. TCP profits, by comparison, stood at Rs1.4 billion during the 2010-11 fiscal year.
According to the official report, persistent poor performance of certain PSEs during the last few years is taking its toll on the fiscal picture. These colossal losses are causing serious impediments in achieving much needed fiscal consolidation and retarding economic growth. An analysis of the financial position of Pakistan Railways, PIA, PSM, USC, TCP, Passco and NHA reveals that most of them are incurring huge losses. The losses are persistently maintaining upward pressures as these stood at Rs113.2 billion in 2009-10 as compared to Rs90.8 billion in 2008-09.
The report states that energy outages are not only impeding the growth prospects but are taking a huge toll on the national exchequer in terms of huge subsidies to cover the tariff differential subsidy (TDS). The government has to pay Rs238.8 billion to cover inter-Disco (power distribution companies) tariff differential. Losses incurred by four Discos including Gepco (Gujranwala Electric Power Company), Mepco (Multan Electric Power Company), Pepco (Peshawar Electric Power Company) and Hepco (Hyderabad Electric Power Company) stood at Rs27.1 billion during 2010-11 ñ almost doubled from Rs14.5 billion in 2009-10.
The losses of these four Discos stood at Rs8.3 billion in 2006-07, Rs21.6 billion in 2007-08, Rs5.4 billion in 2008-09, Rs14.5 billion in 2009-10 and Rs27.1 billion in 2010-11. Now the government has envisaged a budget amount of Rs11.2 billion for these four Discos for the current fiscal year 2011-12.
The report stipulates that the government could have contained the fiscal deficit at 5.2 percent of the GDP if total subsidies had been kept within the budget target of Rs126.7 billion instead of a whopping amount of Rs380.6 billion in 2010-11.
According to the report, the government-formed Cabinet Committee on Restructuring (CCoR) which is entrusted with the task of addressing the fiscal maladies being confronted by PSEs due to poor performance needs to be addressed urgently by the restructuring of a roadmap for their improved economic governance.
The focus of the restructuring is to (i) improve overall corporate governance of PSEs (ii) curtail haemorrhaging: (iii) improve service delivery; (iv) reduce fiscal burden on the exchequer and (v) move to a structural surplus and increased public sector savings.
The report maintains that PSE reforms based on the foregoing contours will be helpful in spurring economic growth, attaining fiscal consolidation and setting aside resources for investing in critical areas like education, health, energy and road infrastructure. Moreover, it will abate pressure on borrowing for budgetary support and devise monetary policy to support private sector investment, the report concluded.