Karachi, February 28, 2024 – Pakistan State Oil (PSO) is grappling with formidable challenges as circular debt and soaring interest rates have substantially increased financial costs, according to a report unveiled on Wednesday.
The report highlighted that the circular debt crisis remains a pressing issue for the company, with outstanding receivables reaching Rs 552 billion as of December 31, 2023, excluding late payment surcharge. Sui Northern Gas Pipeline Limited (SNGPL) alone owed Rs 401 billion to PSO.
The financial burden is further exacerbated by a 104 percent surge in finance costs during the first half of the fiscal year 2023-24 when compared to the corresponding period last year. PSO acknowledged the severity of the situation and revealed that it is actively exploring various options with the government to address the circular debt issue and alleviate the strain on its financials.
Despite these challenges, PSO has taken strategic measures to fortify its infrastructure, focusing on enhancing capacity and reliability. In the first half of fiscal year 2023-24, the company completed the construction of 91 KMT (kilo metric tons) of new storage facilities at Faqirabad, Faisalabad, and Mehmoodkot, increasing the total capacity to 1,232 KMT. Simultaneously, the rehabilitation of storage facilities at Sihala and Zulfiqarabad, along with the addition of four tanks with a combined capacity of 23 KMT at ZOT, Habibabad, Sihala, and Mehmoodkot terminals, was successfully undertaken.
PSO’s commitment to expanding its footprint in the retail sector was evident with the addition of 21 new retail outlets during the same period, bringing the total nationwide presence to 3,547 outlets. In line with the company’s digitalization strategy, a precise meter filling and invoicing system were effectively implemented for retail customers at Keamari Terminal A in Karachi. This technological advancement signifies a significant leap forward in operational precision and efficiency.
Plans are already underway to replicate the success of the digital system at Machike, Mehmood Kot, and Sihala terminals, ensuring accuracy and operational efficiency across various facilities. By leveraging technology and expanding its retail network, PSO aims to streamline operations and enhance customer service.
As the company navigates the complex landscape of circular debt and financial challenges, the efforts to fortify infrastructure and embrace digitalization underscore PSO’s commitment to ensuring long-term sustainability and resilience in the face of economic uncertainties. The collaboration with the government to find viable solutions to the circular debt issue will play a crucial role in shaping the future financial health of one of Pakistan’s largest state-owned enterprises.
