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May 18, 2018

ICCI concerned over rising losses


May 18, 2018

Islamabad : The Islamabad Chamber of Commerce & Industry (ICCI) has shown great concerns over the rising losses of public sector enterprises (PSEs) as these PSEs have reportedly suffered cumulative losses of Rs3.746 trillion over the last five years and called upon the government go take urgent remedial measures to turn PSEs from loss making to profit earning enterprises.

Sheikh Amir Waheed, president, ICCI said that PSEs were running on commercial basis and they were supposed to run on self-finance basis. However, during the tenure of previous government, PSEs recorded an average annual loss of Rs400 billion while during the last five years their cumulative losses have gone up to over Rs3.7 trillion which clearly showed that these enterprises were not running on professional lines.

He said that the current ruling party had vowed during its election campaign to turn around PSEs through restructuring and privatization after coming into power. However, the losses of PSEs reportedly continued to rise during its tenure as they increased to Rs495 billion in fiscal year 2013-14, Rs570 billion in 2014-15, Rs712 billion in 2015-16, Rs862 billion in 2016-17 and crossed the trillion mark in 2017-18, recording a huge loss of Rs1.109 trillion. He said that a report of SBP had shown that the loss-making PSEs had accumulated a total debt of Rs822.8 billion by the end of June 2017 that included the debt of Rs109 billion in FY16 and Rs255 billion in FY17, showing an over twofold increase. But despite taking so much debt, these enterprises kept increasing their losses and put unnecessary burden on the national exchequer.

Sheikh Amir Waheed said that PIA had accumulated losses over Rs146 billion during the last four years while Pakistan Railways also suffered a loss of over Rs26 billion in 2016-17. Similarly, WAPDA recorded the highest increase in its debt, jumping to Rs62 billion at the end of December 2016 compared to Rs14.4bn a year ago. He said IMF had also reported that annual losses of ailing PSEs had swelled to 3.8 per cent of GDP while PIA, Pakistan Steel Mills, Pakistan Railways and power distribution companies were incurring financial losses equivalent to 0.3 percent of GDP to the national exchequer.

He stressed that government in consultation with private sector should devise a new strategy to bring drastic reforms in PSEs with the aim to turn them into profit generating entities. He said government should consider handing over the management control of loss making PSEs to private sector or run them through public-private partnership model.

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