PSO struggles with massive debt, energy sector payment defaults

ISLAMABAD: The Pakistan State Oil (PSO) reported on Wednesday that its circular debt has surged to Rs782 billion, placing the company in a severe financial crisis, alongside the electricity and gas sectors, which are also burdened by circular debt.

According to Dunya News, PSO is yet to receive Rs782 billion, which includes Rs472 billion in principal payments and Rs309 billion in late payment surcharges. These figures conflict with estimates provided by the Petroleum Division which allegedly shared inaccurate details of the debts owed to PSO.

In a recent meeting with the National Assembly committee, the Petroleum Division stated that PSO’s debt stood at Rs516 billion when questioned about the company’s growing financial challenges. Sources told Dunya News that Sui Northern Gas Pipelines Limited (SNGPL) owes PSO Rs497 billion.

Furthermore, national grid stations and the Central Power Purchasing Agency (CPPA) have defaulted on payments amounting to Rs156 billion, while the Pakistan International Airlines (PIA) owes PSO Rs29.24 billion.

The Hub Power Company Limited (HUBCO) also has an outstanding payment exceeding Rs29 billion.

In addition, PSO has written to the Ministry of Finance, highlighting its difficulties in securing Letters of Credit (LC).

It is also noteworthy that after assuming office, the Pakistan Muslim League-Nawaz (PML-N) intensified efforts to privatise various state-owned enterprises. Numerous meetings were held to discuss the sale of assets including PIA, Pakistan Railways, and the country’s three major airports.

It is important to mention that these state-owned enterprises are deeply in debt prompting the government to consider privatisation if satisfactory offers are received from potential buyers.

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