Bangladesh SOEs cost treasury Tk882b as losses mount: WB study

Bangladesh's state-owned enterprises (SOEs) drained nearly
Tk882 billion from the national exchequer in a single year, emerging as one of
the country's biggest fiscal risks, according to a World Bank study.
The study report highlighted that
the deteriorating financial condition of public enterprises has become
"unsustainable" at a time when Bangladesh is already facing falling
revenue collection, slower economic growth and mounting pressure on public
finances, said a press release.
It said the growing losses of SOEs
are consuming resources that could otherwise be invested in healthcare,
education and social protection.
The findings were presented today at a dissemination workshop on the report
titled "Financial Performance and Fiscal Risk of SOEs in Bangladesh"
held at Pan Pacific Sonargaon in the city.
The study was conducted under the
project on strengthening public financial management for better service
(SPFMS), with the support of the Policy Research Institute (PRI) of Bangladesh.
According to the study,
non-financial SOEs incurred a combined adjusted loss of Tk441 billion in
FY2024, while total net fiscal transfers from the government, including
subsidies and development funding, climbed to around Tk882 billion, equivalent
to 1.7% of GDP.
Tanvir Ghani, Investment and
Capital Market Affairs Special Assistant to the prime minister, attended the
workshop as the special guest.
Suraiya Zannath, Lead Governance Specialist, and team leader (SPFMS) WB,
explained the context and objectives of the study and how the analysis will
help frame policy and institutional reform.
Hasan Khaled Foisal, Additional Secretary, FD, delivered a presentation on the
overview of SOEs, debt management and the macro-fiscal scenario, while Rahima
Begum, Additional Secretary, FD, made the opening presentation highlighting the
Public Financial Management Reform Strategy 2025-2030 relating to SOEs.
Henri Fortin, Lead Public Sector
Specialist, WB, discussed international experiences of SOE reform and Immanuel
Frank Steinhilper, Senior Governance Specialist, WB, presented global trends
relating to SOEs.
Khurshid Alam, Executive Director, PRI, delivered the keynote presentation on
the financial performance and fiscal risks of Bangladesh's SOEs.
The session was conducted by
Mohammad Atikuzzaman, Sr. FMS, while Nazmus Sadat Khan, Economist, WB,
delivered the closing remarks.
The study found that the energy and
power sector accounted for the overwhelming majority of the losses.
The Bangladesh Power Development
Board alone recorded losses exceeding Tk444 billion in FY2024 due to high power
generation costs, costly capacity payments to private power producers and
electricity tariffs kept below production costs.
The report said politically
influenced investment decisions, controversial contracts with independent power
producers and weak corporate governance have severely undermined the sector's
financial sustainability.
Other major loss-making entities
include the Bangladesh Oil, Gas and Mineral Corporation, Bangladesh Rural
Electrification Board, Trading Corporation of Bangladesh and several
manufacturing corporations in the fertiliser, sugar and jute sectors.
The report observed that many
manufacturing SOEs continue to incur persistent losses despite operating in
competitive markets where private firms remain profitable.
The report also highlighted deep
corporate governance weaknesses within Bangladesh's SOE structure.
It identified fragmented laws,
bureaucratic control, weak oversight and lack of financial transparency as key
reasons behind poor performance.
The report compared Bangladesh
unfavourably with regional peers. While Bangladesh's SOEs posted a negative
return on assets of 5.2% in FY2024, India's SOEs generated a positive return of
9.7%, and Vietnam's SOEs recorded around 11.9% in recent years.
According to the study, Bangladesh
could potentially mobilise more than Tk1.2 trillion in additional fiscal
resources if SOEs achieved a 10% return on assets and reduced their dependence
on subsidies.
To address the crisis, the report
recommended wide-ranging reforms, including restructuring commercially viable
SOEs, introducing independent and professionally managed boards, strengthening
financial disclosure requirements, reducing political interference and
gradually opening monopoly sectors to competition.
It also suggested eventual
privatisation or closure of chronically loss-making enterprises that no longer
serve strategic national purposes.
















