ISLAMABAD - The collective debt and liabilities of Public Sector Entities have swelled to Rs1.2 trillion at the end of March this year amid government's failure to bring reforms or privatizing these PSEs.

The debt and liabilities of PSEs have gone up by over 24 percent on annual basis, as it recorded at Rs964 billion in March last year. Liabilities alone have swelled to Rs200 billion in March 2018, according to the data of State Bank of Pakistan.

Debt of the PSEs has increased to Rs996.4 billion at the end of March 2018 as compared to Rs765 billion a year ago, showing an increase of 30.2 percent. The debt is increasing at rapid pace as ailing PSEs could not meet its expenses due to their heavy losses.

The government has failed to privatize the loss-making PSEs including Pakistan International Airlines (PIA), Pakistan Steel Mills and power sector companies in last five years.

Similarly, losses of power sector entities and PIA are increasing with the passage of year. The incumbent government is under severe pressure for increasing domestic as well as foreign debt servicing as it continues to pay mostly interest. Similarly, PSEs are increasing to overall debt servicing. PIA's debt has increased to Rs148.1 billion at the end of March 2018 as compared to Rs108.7 billion of a year ago.

Debt of Pakistan Steel Mills remained at Rs43.2 billion. The PSM was forced to shut down two and half years back. The PSM management is not in position to pay the salaries to the employees. The federal government is paying salaries to the PSM's workers from its own resources. The government failed to privatise Pakistan Steel.

Water and Power Development Authority (Wapda) recorded an increase of over Rs37.8 billion in one year, as its debt increased to Rs124.2 billion at the end of March 2018, which was Rs86.4 billion a year ago.  Oil and Gas Development Corporation (OGDC)'s debt has recorded at Rs3.5 billion in March 2018.

Meanwhile, debt of other PSEs has swelled Rs677.4 billion at the end of March 2018 as compared to Rs522.9 billion of the last year, according to the latest data of the State Bank of Pakistan.

Meanwhile, Islamabad Chamber of Commerce and Industry has shown great concerns over the rising losses of public sector enterprises over the last five years. It has called upon the government go take urgent remedial measures to turn PSEs from loss making to profit earning enterprises.

Islamabad Chamber of Commerce and Industry President Sheikh Amir Waheed 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 Rs.3.7 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 privatisation after coming into power. However, the losses of PSEs reportedly continued to rise during its tenure as they increased to Rs.495 billion in fiscal year 2013-14, Rs.570 billion in 2014-15, Rs.712 billion in 2015-16, Rs.862 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.

Waheed said that PIA had accumulated losses over Rs.146 billion during the last four years while Pakistan Railways also suffered a loss of over Rs.26 billion in 2016-17.

Similarly, Wapda recorded the highest increase in its debt, jumping to Rs.62 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 percent 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 in order to turn them around before going for their privatization as these loss making PSEs were proving a big drain on the financial resources of the country.