Introduction
Many of the State Owned Enterprises (SOEs) in Pakistan have lost their financial viability and their quality of service delivery has continuously been deteriorating. Instead of playing any productive role in the economic growth of the country, most of the SOEs in Pakistan are incurring huge losses and becoming a burden on the economy.
During past three years, losses incurred by the three major SOEs- Pakistan Steel Mills (PSM), Pakistan Railways (PR) and Pakistan Internation al Airlines (PIA)- have increased to about Rs. 705 billion.
The establishment or existence of SOEs is generally justified on the argument that such organisations can help in the provision of certain goods at a lower price. Provision of goods at a cheaper price requires efficiency at every stage of the business process. However, many of the SOEs in Pakistan are so inefficient that they cannot even sustain without continuous support of the government.
This can be easily justified by analysing the current state of power sector SOEs which are suffering from severe transmission and dispatch losses. In June 2013, government has cleared the circular debt of Rs. 480 billion, accumulated by the power sector SOEs. However, due to inefficiencies prevailing in power sector SOEs the circular debt has again surged to around Rs. 660 billion, out of which Rs. 348 billion has been accumulated in last three years. Moreover, during the past three years electricity tariffs have been repeatedly increased even though the cost of producing electricity has been declined due to downfall in the global oil prices.
The total losses of PIA, PSM, PR and power sector SOEs have surged to Rs. 1.365 trillion which is around 9 percent higher than the current year annual development plan- amounted to Rs. 1.25 trillion.
