Public sector firms’ debt rises to Rs 665.2 billion in FY2015

KARACHI: The debt-laden public sector enterprises (PSEs) increased their liabilities by 13 percent or Rs76.6 billion during the last fiscal year of 2014/15, central bank data showed on Friday.
Their debt and liabilities stood at Rs665.2 billion or 2.4 percent of gross domestic product.
Analysts say PSEs are burden on the national exchequer.
“The loss-incurring PSEs remain a contingent liability. The government borrows from the banks helping their expenses running,” said an analyst. “Some of the government funds and revenue go to the PSEs debt servicing, a bottleneck for growth and a drag on public finances.”
A break-up on PSEs debt profile released by the State Bank showed that PSEs debt climbed to Rs458.7 billion in the last fiscal year, 25.3 percent higher in comparison with the fiscal year 2014. Their liabilities stood at Rs206.4 billion against Rs222.4 billion in preceding year.
The bulk of the increase in domestic debt of the PSEs is stemmed from the power generation companies, which debt and liabilities surged to Rs316.6 billion in FY15 against Rs235.9 billion during FY14.
Among top public sector firms, the highest level of debt was accumulated by Pakistan International Airlines Corporation (PIA), with Rs78.7 billion followed by Pakistan Steel Mils Corporation with Rs42.3 billion during FY15.
The outstanding debt of Water and power Development Authority (WAPDA) stood at Rs18.9 billion, while Oil and Gas Development Corporation was a meager of Rs2.3 billion.
Analysts said that OGDC and WAPDA are profitable companies, largely, running their expenses and projects with their own resources. “PIA and Steel Mills, both, are involved in restructuring their balance sheets,” the analyst said.
It is worth mentioning that reformation and later privatisation of the public sector enterprises were amongst the key performance criteria set for the International Monetary Fund for the on gong xx billion bailout programme.
The government sold 41.5 percent of its stake in HBL in April 2015, and completed the sale of Heavy Electrical Complex in May 2015. The government has also divested its share in other profitable financial institutions like UBL and ABL. The government is also expediting privatisation of power companies.
According to the IMF timeline, there are 12 PSEs to be privatised up to June 2016 with strategic and asset sale.