Key Takeaways:
– Senate Committee Exposes Gas Sector Debt Crisis in Pakistan
– Pakistan State Oil (PSO) is facing collapse due to unpaid dues amounting to Rs 800 billion.
– The gas sector’s circular debt has surged to Rs 2,897 billion.
– Major contributors to the debt include OGDCL, PSO, and Pakistan Petroleum Limited.
– A potential $5 billion investment in the oil and gas sector is on the horizon.
Committee Meeting Revelations
In a recent Senate Standing Committee on Petroleum meeting, startling details about the gas sector and Pakistan State Oil (PSO) were unveiled. The committee focused on the critical issue of circular debt, which is severely impacting the sector.
PSO’s Dire Financial Straits
The Managing Director of PSO reported a troubling financial situation, with PSO on the brink of collapse due to an unpaid collection of Rs 800 billion from bankrupt government entities. The Ministry of Petroleum presented a comprehensive report, highlighting that the circular debt has reached an alarming Rs 2,897 billion. This significant rise is attributed to the stagnation of gas tariffs between 2013 and 2023.
Three major companies account for 95% of this debt, with Oil and Gas Development Company Limited (OGDCL) owing Rs 1,133 billion, PSO at Rs 816 billion, and Pakistan Petroleum Limited (PPL) at Rs 803 billion.
Breakdown of Debt Contributors
Three major companies account for 95% of this debt, with Oil and Gas Development Company Limited (OGDCL) owing Rs 1,133 billion, PSO at Rs 816 billion, and Pakistan Petroleum Limited (PPL) at Rs 803 billion. PSO’s MD noted that the power sector, PIA, and Pakistan Steel Mills owe the company Rs 800 billion, contributing to its financial woes.
Potential Investment and Future Prospects
Despite the grim scenario, the committee highlighted a positive development. There is a potential $5 billion investment in the oil and gas sector. An exploration initiative in the sea is scheduled to start in January 2025, with licenses for 24 blocks to be issued. Additionally, efforts are being made to attract investment from Chinese state-owned companies.
