ISLAMABAD - Public sector entities (PSEs) debt surged to Rs1.59 trillion by the end of December as the successive governments failed to bring improvement in PSEs including Pakistan International Airlines (PIA) and Pakistan Steel Mills.
The debt of PSEs including domestic and foreign had gone up to Rs1.59 trillion by end of December, which is 13.8 percent higher than the corresponding period of the previous year. The break-up of Rs1.59 trillion showed that external debt of the PSEs stood at Rs372 billion and domestic debt at Rs1.213 trillion.
External debt of the PSEs stood at Rs 240b & domestic debt at Rs1.213tr
According to the official figures, PIA’s debt has increased to Rs149 billion at the end of December 2018 as compared to Rs146 billion of June 2018. The PIA still needs billions of rupees to meet its expenses as well as to get new airplanes on lease. The ECC in last week had approved Rs5.6b guarantee to enable the PIA to revive two grounded aircraft on an urgent basis to secure some new routes as part of the overall route rationalisation plan and smooth Haj operations. The aviation division said and demanded Rs8.4b government guarantee, besides Rs485 million cash grant to repair in-flight entertainment system. The total loss to the PIA had recorded at Rs414.3 billion. The PIA has been facing Rs4 billion in monthly revenue losses along with Rs1.5 billion in average interest payment monthly.
Debt of Pakistan Steel Mills remained at Rs43.2 billion. The PSM was forced to shut down in July 2015 due to the many reasons. Similarly, the total losses and liabilities of the PSM have gone beyond Rs480 billion by January. Water and Power Development Authority (Wapda) recorded an increase of over Rs130 billion in one year. Oil and Gas Development Corporation (OGDC)’s debt was recorded at Rs4.9 billion by end of December 2018. Meanwhile, debt of other PSEs has swelled Rs886.2 billion at the end of December 2018 as compared to Rs743.4-billion of the June 2018.
The successive governments had failed to bring reforms in the PSEs or to privatise them in last many years. However, the incumbent government had come with a plan to deal with loss making public sector entities, which will work on Singaporean and Malaysian models. The federal cabinet in November approved the formation of Sarmaya-e-Pakistan Company. The government has decided to transfer the management control of PSEs to newly incorporated holding company to be Sarmaya-i-Pakistan Company. As such the existing PSEs shall become subsidiaries of Sarmaya-i-Pakistan Company.
The Securities and Exchange Commission of Pakistan (SECP) has incorporated Sarmaya-e-Pakistan, the holding company for state owned enterprises. “Sarmaya-e-Pakistan, the holding company for state owned enterprises, has been incorporated. Turning around the state owned enterprises and eliminating their losses which are eating up resources which should be used for development and welfare, is vital for economic turnaround of Pakistan,” Finance Minister Asad Umar said on his social media account on Friday.
The Company shall be incorporated as a company by Finance Division with 100% shareholding with the government of Pakistan. The shares of the federal government in the existing PSEs shall be transferred to Sarmaya-e-Pakistan Company and appropriate changes in their respective Articles/Memorandum of Association shall be made. Suitable legislative measures shall be taken to enable the federal government to appoint the Board of Directors of the PSEs on the recommendations of Sarmaya-i-Pakistan Company.
Secretary Finance Arif Ahmed Khan has been made chief executive officer/director of the company while Secretary Industries Azhar Ali Chaudhary and Secretary Cabinet Fazal Abbas would be directors of the Sarmaya-e-Pakistan Holding Company. The board of directors (BoD) of the holding company is yet to be notified. The board of directors of Sarmaya-e-Pakistan Company will consist of three government members and eight from the private sector including the chairman. Under the board there will be five verticals including power, oil and gas, manufacturing, financial services and logistics. Each vertical would be responsible for developing the guidance and strategic direction of the entities under its control.