State-owned enterprises (SoEs) are yet again incurring losses in the current financial year, despite having a good profit in FY23. Alongside persistent losses, the capital of these companies is shrinking compared to recent years.
An analysis of the FY24 revised budget for the 49 state-owned institutions shows that the net loss of 49 state-owned institutions is estimated at Tk 5,543.56 crore in the revised budget. This loss however was Tk 14,673.98 crore in the proposed budget.
It should be noted that these institutions gained Tk 310.23 crore net profit in FY23.
Speaking to The Business Post on condition of anonymity, a senior finance ministry official said, “Petrobangla is the biggest state-owned enterprise in the country. This company’s profits or losses depend on the power sector subsidy.
“Since the government is gradually reducing subsidies, the company is incurring losses. These losses are falling on the shoulders of others. This is why the state-owned institutions are posting losses this year. Among the larger companies, the Bangladesh Sugar and Food Industries Corporation is also facing losses.”
He continued, “However, among the state-owned institutions, the Bangladesh Telecommunication Regulatory Commission (BTRC), Bangladesh Petroleum Corporation (BPC), BTRC, Chittagong Port Authority, RAJUK, Bangladesh Rural Electrification Board, are profitable, so the overall net loss will be smaller in FY24.”
However, the net profit of profitable companies is lower than before.
SoE assets also declining
Meanwhile, the total assets of such enterprises are also declining in FY24. In FY23, the combined assets of such companies were Tk 7,94,974.38 crore. But in the revised budget for FY24, the figure would go down by Tk 51,407.36 crore to Tk 7,43,567.02 crore.
A number of officials from such enterprises said they did not go for fresh expansion in FY24. So, there is no opportunity to mark any increase or decrease in land prices without revaluation. As a result, the value of assets cannot be refreshed with up-to-date land value.
If the latest land prices are calculated, the company asset base would be higher. Moreover, fixed asset prices decrease every year. This is also one of the reasons for declining asset prices, they pointed out.
Investments and loans
The 49 state-owned enterprises’ investments, injection of capital, and long-term loans will increase at the end of FY24. Besides, their long-term debt repayments will jump, and dividend payout will decrease.
Investment in the revised budget for FY24 is shown at Tk 33,882.29 crore, which was the same in the proposed budget. This amount was Tk 21,924.39 crore in FY23. So, investment has increased by Tk 11,957.9 crore.
New loan receipts are estimated at Tk 9,867.30 crore, which was Tk 8,364.43 crore in the original budget of FY24.
In FY23, the figure was Tk 6,388.82 crore. Besides, in the revised budget for FY24, the receipt of long-term loans is estimated at Tk 12,980.25 crore, compared to Tk 5,370.16 crore posted in the proposed budget of the same FY.
The long-term debt repayment target of 49 state-owned enterprises was set at Tk 22,892.02 crore. But due to the financial crisis, it has been reduced to Tk 16,351.99 crore in the revised budget for FY24. In FY23, Tk 10,480.63 crore in long-term debt was repaid.
Meanwhile, the companies have also reduced the issuance of dividends. In FY23, Tk 1,730.95 crore was paid as dividend. But in the revised budget for FY24, Tk 1,037 crore has been set as the distribution target.
