The recent privatisation of Pakistan International Airlines (PIA) has reignited debate over the future of state-owned enterprises (SOE) strategy, raising questions about valuation, fiscal relief and the broader direction of economic reform. While the national carrier was sold for Rs135 billion to the Arif Habib Consortium, the government is set to receive only Rs10.2bn, prompting mixed reactions over whether the deal represents success or loss.
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PIA’s sale is part of a wider privatisation push unveiled in August, under which the government plans to offload 24 SOEs over five years in three phases. The process began with the sale of First Women Bank to a UAE-based firm in October, and more transactions are expected as Islamabad seeks to ease fiscal pressure.
Assessing the true worth of SOEs, however, remains complex. Many entities own assets that are outweighed by liabilities and continue to post losses. In FY24, SOEs generated cumulative revenues of Rs13.5 trillion, but losses still stood at Rs30.6bn. Much of the improved performance was driven by the oil and gas sector, which accounted for the bulk of revenue growth and profits, masking weaknesses elsewhere.
Among the 24 entities slated for privatisation, 20 recorded Rs3.87tr in revenues but posted collective losses of Rs225bn in FY24. Losses are particularly concentrated in the power sector, which alone accounted for Rs199bn, while PIA remains one of the biggest laggards. In contrast, profitable entities such as State Life Insurance and National Insurance are also included in the pipeline, raising concerns over selling income-generating assets.
The fiscal cost of sustaining SOEs is significant. In FY24, government support totalled Rs1.58tr—about 12pc of budget receipts—largely directed towards the power sector through subsidies, grants and loans. While privatisation could free up fiscal space, it does not guarantee long-term relief, especially where sectors provide essential public goods.
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Ultimately, the success of privatisation will depend on whether it clarifies the state’s role, reduces reliance on subsidies, and encourages genuine private-sector investment rather than shifting financial burdens back to the government.