OGDC awaits formal communication on circular debt settlement

ISLAMABAD: Oil and Gas Development Company Ltd (OGDC) has clarified that it has not yet received any official communication from relevant authorities regarding the issue of circular debt settlement.

The company made this statement in response to recent news articles discussing circular debt settlement plans. According to Business Recorder, OGDC’s board of directors held meetings on August 10 and August 17 to address the matter.

In a notice to the Pakistan Stock Exchange (PSX), OGDC emphasised that as of the present date, there has been no formal communication from authorities. The company cautioned stakeholders and the public to rely solely on official communications for accurate information, suggesting that any information about a settlement plan could be speculative.

This clarification followed reports that the previous government had shared a draft plan to reduce gas sector circular debt with the International Monetary Fund (IMF). The plan reportedly involves non-cash book adjustments and tariff rationalisation, subject to IMF’s agreement. Expectations of a resolution to the circular debt issue had caused increases in share prices of OGDC and PPL, which receded after the company’s clarification notice.

The circular debt problem has been a significant challenge in Pakistan’s power sector, burdening the government financially. Although tariff increases have been implemented, the debt accumulation continues. In addition to addressing the circular debt issue, OGDC’s notice also mentioned the approval of hiring an EPCC Contractor for the KPD-TAY compression project. The company expressed its commitment to indigenisation, self-reliance, and supporting the domestic economy through local resources and technologies, including minimizing exports and contributing to trade balance enhancement.

Read more: Circular debt surges to Rs2.31 tr