Shocking revelations about the gas sector and Pakistan State Oil (PSO) were disclosed during a recent meeting of the Senate Standing Committee on Petroleum.
The committee highlighted the massive circular debt issue plaguing the gas sector. The Managing Director of PSO delivered an alarming report, stating that PSO is in a state of collapse due to an outstanding collection of Rs 800 billion from bankrupt government companies.
Officials from the Ministry of Petroleum presented a detailed report, revealing that the circular debt has ballooned to Rs 2,897 billion, largely due to the gas tariff not being increased from 2013 to 2023.
The annual shortfall between the official purchase and sale price of gas stands at Rs 800 billion.
The briefing noted that three major companies owe a staggering Rs 2,752 billion, accounting for 95 percent of the total circular debt.
Specifically, Oil and Gas Development Company Limited (OGDCL) owes Rs 1,133 billion, PSO owes Rs 816 billion, and Pakistan Petroleum Limited (PPL) owes Rs 803 billion.
MD PSO further explained that they are to receive Rs 800 billion from various government institutions, including the power sector, PIA, and Pakistan Steel Mills, all of which are financially distressed.
Despite the grim financial picture, some positive news emerged. The committee was informed of a potential 5 billion dollar investment in the oil and gas sector.
An exploration initiative in the sea is set to begin in January 2025, with licenses for 24 blocks to be issued. Efforts are underway to encourage Chinese state-owned companies to invest in this sector.
