Loans, subsidies, grants and equity: Cash-strapped SOEs receive Rs616bn from govt in first six months of FY25

ISLAMABAD: The federal government has poured Rs616 billion into state-owned enterprises (SOEs) in just six months, a 42pc jump from the same period last year. This massive bailout highlights the huge financial burden of propping up loss-making public entities, particularly in the power and utility sectors.

The support came in the form of loans, subsidies, grants and equity injections, according to official documents from the finance ministry. The assistance provided between July and December 2024 included subsidies, grants, loans and equity injections, underlining the government’s growing financial burden in sustaining public entities, especially in the power and utility sectors.

According to the finance ministry’s report, the total financial support to SOEs rose from Rs433bn in July-December 2023 to Rs616bn in the same period of 2024, indicating an additional outlay of Rs183bn. Of this, Rs333bn was provided as subsidies, showing a 46pc year-on-year rise, while Rs113.52bn was provided as grants, Rs92bn as loans and Rs77.49bn as equity support.

Among the top recipients of subsidies were several power distribution companies and public service entities. Multan Electric Power Company (Mepco) received Rs43.57bn, Islamabad Electric Supply Company (Iesco) Rs42.14bn, Hyderabad Electric Supply Company (Hesco) Rs39.59bn, Faisalabad Electric Supply Company (Fesco) Rs39.89bn, and Pakistan Agricultural Storage and Services Corporation (Passco) Rs36.17bn. Others included Quetta Electric Supply Company (Qesco) with Rs32bn, Peshawar Electric Supply Company (Pesco) Rs27bn, Lahore Electric Supply Company (Lesco) Rs26bn, Tribal Electric Supply Company (Tesco) Rs14bn, Gujranwala Electric Power Company (Gepco) Rs13bn, and Sukkur Electric Power Company (Sepco) Rs11bn. Additional subsidy recipients were Pakistan Broadcasting Corporation (PBC) Rs3.39bn, Trading Corporation of Pakistan (TCP) Rs1.66bn, and Utility Stores Corporation Rs1.68bn.

Grants were allocated to major national entities, including Power Holding Company Rs66.56bn, Pakistan Railways Rs26.60bn, Wapda Rs13bn, PTCL Rs4bn, Gwadar Port Authority Rs260 million, Pakistan Television Corporation Rs38m, and the National Highway Authority (NHA) Rs3bn.

Loans amounting to Rs92bn were also disbursed. These included Rs51bn to the National Transmission and Despatch Company (NTDC), Rs32.49bn to NHA, Rs3bn to Jamshoro Power Company, Rs2.43bn to Iesco, Rs2.14bn to Qesco, Rs1.89bn to Pesco, Rs600m to Mepco, and Rs5m to PBC.

Equity support totalling Rs77.49bn was injected into seven state entities. Qesco received the highest share at Rs66bn, followed by Pesco at Rs4.65bn, Sepco Rs2.97bn, Lesco Rs2bn, Mepco Rs970m, Fesco Rs920m, and Iesco Rs155m.

The report highlights the government’s continued fiscal commitment to underperforming public-sector enterprises, despite longstanding pledges of restructuring and reform. Financial analysts warn that this rising dependence on bailouts and subsidies, particularly in the power sector plagued by inefficiencies and circular debt, could squeeze vital development and welfare spending in an already fragile economic environment. Without serious structural reforms, the federal budget risks being increasingly consumed by recurring support for loss-making state enterprises, raising concerns among economic observers and global lenders.