EDITORIAL: Despite lofty assurances, reform roadmaps and repeated declarations of intent, the government’s narrative on fixing state-owned enterprises (SOEs) rings hollow when confronted with unforgiving fiscal reality. In the first full fiscal year of Prime Minister Shehbaz Sharif’s government, SOEs slid deeper into financial distress, with their cumulative net losses surging by nearly 300 percent, soaring from Rs30.6 billion in FY2023-24 to a massive Rs122.9 billion in FY2024-25. These numbers, presented by the finance ministry at a meeting of the Cabinet Committee on State-Owned Enterprises last week, expose a widening gap between promise and performance.A closer reading of the data deepens this disquiet. The combined revenues of SOEs fell over 10 percent to Rs12.4 trillion in FY2024-25, while even among profitable enterprises, earnings lost momentum, with aggregate profits sliding 13 percent from the previous year to end at Rs710 billion. Loss-making SOEs offered little comfort, with their combined losses easing by a negligible two percent, a change too small to signal any meaningful turnaround. Worse still, SOEs also drew a massive Rs2.1 trillion in annual fiscal support, underscoring how public resources continue to be funneled into chronic inefficiency rather than productive growth. These fiscal flows were driven largely by higher equity injections to address the circular debt build-up, making it patently clear that public funds are being used to manage distress, and not to resolve the structural failures that continue to drag SOEs and the wider economy down. While the finance ministry attributes the decline in SOE revenues primarily to falling international oil prices, which compressed margins in the oil sector, this factor can only explain a small part of the slowdown, and cannot account for the sheer magnitude of the losses now weighing on the public balance sheet. These losses, it must be noted, are not broadly spread but heavily concentrated in a small cluster of entities, most notably the National Highway Authority and several power distribution companies (DISCOs). This is hardly a new development. These entities have long been mired in inefficiency and chronic red ink, underscoring that the losses in FY2024-25 reflect deep-seated structural failures rather than temporary market fluctuations. Nowhere is this more evident than in DISCOs, which have come to embody the power sector’s systemic decay: a crumbling transmission and distribution (T&D) network haemorrhaging revenue through electricity theft, excessive line losses and chronic mis-governance. High depreciation and financing costs compound the problem, as an ageing T&D infrastructure inflates balance sheets without generating commensurate revenue, while repeated borrowing to bridge cash shortfalls and service circular debt accumulates interest expenses, locking these entities into a self-perpetuating cycle of financial stress. Even when it comes to profit-making SOEs, the system’s limits are apparent, as their returns often rely on guaranteed government contracts, leaving open the question of whether they could survive under genuine open market competition. The need for a bold, wide-ranging reform agenda for SOEs, then, remains urgent, yet progress on the ground has been painfully slow. Efforts so far have been piecemeal, lacking coherence, and often driven more by pressure from international lenders than by a genuine commitment to restructuring loss-making entities. Meaningful change would require comprehensive sectoral reorganisation, greater deregulation to foster competition and the establishment of robust corporate governance frameworks to tackle inefficiencies, while strengthening transparency and accountability. What we’ve had on our hands instead is political inertia and bureaucratic resistance. This has meant that for an administration that has repeatedly promised sweeping SOE reform, plans remain largely on paper, execution is patchy at best and the cost of delay keeps mounting. The government must recognise that without decisive action on SOE governance, accountability and privatisation, the reform narrative will remain meaningless while the financial haemorrhage continues unabated. Copyright Business Recorder, 2026