State enterprises may see higher losses next fiscal year

State-owned enterprises (SOEs) in Bangladesh will likely incur collective losses of Tk 14,703 crore in the coming fiscal year, according to the finance ministry.

This projection is 7 per cent higher than the provisional estimate of Tk 13,740 crore for the outgoing fiscal year, shows a summary of the proposed budget for SOEs in FY2023-24.

As per the document released by the Finance Division on June 1, the Bangladesh Power Development Board (BPDB) recorded the highest loss of Tk 6,969 crore in FY 2022-23.

The Bangladesh Sugar and Food Industries Corporation (BSFIC) came in second with losses of Tk 678 crore while the Bangladesh Jute Mills Corporation (BJMC) placed third with Tk 284 crore.

Meanwhile, the Bangladesh Road Transport Corporation faced net losses of Tk 84.83 crore while it was Tk 49.31 crore for the Bangladesh Inland Water Transport Corporation.

As per the document released by the Finance Division on June 1, the Bangladesh Power Development Board recorded the highest loss of Tk 6,969 crore in FY2022-23.

The Finance Division proposed allocating funds of Tk 824,565 crore for all 48 SOEs in the next fiscal year against projected earnings of Tk 409,862 crore.

Regarding the BPDB's losses, the finance division said the organisation aimed to earn Tk 51,516 crore against expenditures of Tk 97,698 crore in the outgoing fiscal.

But in the coming fiscal year, the BPDB is targeting revenue of Tk 59,172 crore against operational costs of Tk 109,179 crore, with which the government estimated advance net losses of Tk 4,959 crore.

Similarly, the Finance Division projects that the BSFIC will face losses of Tk 762 crore against earnings of Tk 879 crore and expenditures of around Tk 1,009 crore.

As per the provisional estimate, the total cumulative debt service liabilities (DSL) of the SOEs in Bangladesh stood at about Tk 183,170 crore as of February 28 in FY 2022-23.

Out of this amount, classified loans accounted for Tk 184.76 crore.

The SOEs that have classified loans are: the BJMC with Tk 132.12 crore, Bangladesh Agricultural Development Corporation (BADC) with Tk 27.21 crore and Bangladesh Textile Mills Corporation (BTMC) with Tk 24.9 crore.

Md Arifur Rahman Apu, chairman of the BSFIC, said the government is giving support to the SOEs so that they can recover their losses, which is better than nothing.

"We are trying to reduce losses and have taken initiatives like diversifying products and modernising operations," he added.

Apu went on to say that production at their mills would increase within the next two years as they are providing high-yield sugarcane seeds with the help of British American Tobacco.

"Then, the losses will come down continuously," he said, adding that it is possible to recover the losses through an effective action plan that can save the local industry.

Khondaker Golam Moazzem, research director of Centre for Policy Dialogue, said losing concerns of SOEs should be closed, handed over to the private sector or utilised through leasing.

He then said the government should postpone the feasibility studies for reviving loss-making SOEs as there is no need to run a losing enterprise considering how the private sector has developed over the past 50 years.

Also, the government does not need to give subsidies or stimulus to save these enterprises as it is a waste of public money, added Moazzem, who is popularly known as an industrial economist.