Pakistan State Oil (PSO), the federal government and the International Monetary Fund (IMF) are working on a settlement plan to address the country’s outstanding circular debt. The development comes as authorities seek to improve financial stability across the energy sector and resolve long-standing payment delays.
During its annual general meeting, PSO management said the company’s receivables had not increased since February 2024. The company also reported receiving around Rs. 10 billion in circular debt payments from the Power Division after the financial year ended.
Additionally, PSO received Rs. 26 billion from Sui Northern Gas Pipelines Limited (SNGPL) during the final quarter of the financial year.
PSO Recovers Market Share Amid Financial Challenges
PSO has regained more than 40% of the oil marketing market, with most of its recovery recorded since July 2026. Management attributed the improvement to better product availability, pricing discipline and stronger supply chain operations.
However, the company continues to face financial challenges in its liquefied natural gas (LNG) business. Although supplies under its government-to-government agreement with QatarEnergy remain profitable on a standalone basis, high taxes and financing costs affect overall profitability.
PSO management said it had received 11 LNG cargoes from QatarEnergy since March. The company is also coordinating with the government to ensure adequate supplies for the upcoming winter season.
Energy Reforms Aim to Address Outstanding Payments
The government and the IMF have been discussing options to manage circular debt and improve the financial performance of energy companies. However, disagreements remain over how to settle outstanding liabilities and distribute the financial burden.
Meanwhile, PSO is exploring investment opportunities in Pakistan Refinery Limited to strengthen its refining operations and improve long-term supply security. The company is also working with partners on the White Oil Pipeline project to improve petroleum transportation and reduce reliance on road deliveries.
These initiatives form part of broader efforts to improve energy sector efficiency, manage financial risks and ensure reliable fuel supplies. However, the final settlement plan and its implementation timeline have not yet been confirmed.
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