Pakistan State Oil (PSO) has announced discussions with the government regarding a strategic plan aimed at acquiring stakes-ownership in various public sector energy enterprises. This initiative is intended to address PSO’s circular debt, owed notably by entities such as PIA.
The issue of accumulating debt within Pakistan’s power sector is a pressing concern highlighted by the International Monetary Fund (IMF), with imminent talks scheduled between the government and the IMF for a new long-term loan agreement.
Syed Muhammad Taha, the managing director and chief executive of PSO, emphasized that the acquisition process will adhere to competitive bidding protocols. If successful, acquired stakes will be utilized to offset PSO’s outstanding receivables. “Everything will be done through competitive bidding and we will participate and if we win, the stakes will be offset against (PSO’s receivables),” said Syed Muhammad Taha. He underscored the ongoing collaboration with the government on this proposal.
As reported by the IMF, Pakistan’s power and gas sectors grappled with circular debt amounting to Rs4.6 trillion by June 2023, equivalent to about 5 percent of GDP. This debt cycle, originating from unpaid dues along the power sector chain, poses a significant challenge to financial stability.
Syed Taha outlined PSO’s initial plans to acquire stakes or complete ownership of assets such as power plants in Nandipur and Guddu, along with equity interests in profitable public sector entities like Oil and Gas Development Co (OGDC).
Furthermore, PSO is actively engaged in discussions regarding the privatization of Pakistan International Airlines (PIA), with proposals including a potential asset swap and a stake in PIA’s non-core assets. This move aligns with the government’s efforts to reform public-sector enterprises, as per IMF directives.
PSO’s receivables from government agencies and autonomous bodies amounted to Rs499 billion, with the largest share attributed to Sui Northern Gas, a government-majority shareholder.
Looking ahead, Syed Taha anticipates a modest increase in petroleum product demand as economic conditions improve. PSO is collaborating with strategic investors from China and the Middle East to enhance and expand Pakistan Refinery operations, leveraging its extensive network of retail outlets, depots, airport facilities, and storage capacity.
