State-owned energy company completes recovery of all scheduled interest payments under government-backed TFC arrangement
ISLAMABAD: Oil and Gas Development Company Limited (OGDCL) has received the twelfth and final interest payment of Rs7.725 billion from Power Holding (Private) Limited (PHL), marking the completion of the interest payment schedule under the government’s circular debt settlement plan.
In a notification submitted to the Pakistan Stock Exchange (PSX) on Wednesday, OGDCL informed shareholders that the payment relates to the Term Finance Certificates (TFCs) issued under the Government of Pakistan’s approved mechanism for addressing circular debt within the energy sector.
With the receipt of the latest instalment, the company has now collected a cumulative Rs92 billion in interest payments under the arrangement.
OGDCL stated that the final payment represents the successful completion of a key component of the circular debt settlement framework and reflects continued implementation of measures aimed at resolving long-standing financial bottlenecks in Pakistan’s power and energy sectors.
The circular debt issue has remained one of the most significant structural challenges facing the country’s energy industry for more than a decade. The accumulation of unpaid obligations across power producers, fuel suppliers, transmission companies and distribution companies has created liquidity constraints throughout the energy supply chain.
To address the problem, the government introduced various financing and settlement mechanisms, including the issuance of Term Finance Certificates through Power Holding (Private) Limited to facilitate payments to energy sector entities.
Market participants view the completion of the interest payment schedule as a positive development for OGDCL, as it strengthens the company’s cash position, improves liquidity, and enhances certainty regarding recoveries linked to the circular debt resolution programme.
Analysts believe the receipt of the final instalment could further support the company’s financial performance by improving cash flow management and reducing concerns related to delayed payments within the energy sector.
The company noted that the disclosure was made in accordance with Section 96 of the Securities Act, 2015 and Clause 5.6.1(a) of the Pakistan Stock Exchange Regulations to ensure timely dissemination of material information to investors and stakeholders.
Investors are expected to welcome the development, as the completion of the payment cycle demonstrates progress in the government’s efforts to meet commitments under the circular debt settlement plan and improve financial discipline across the energy sector.
The latest payment also underscores ongoing efforts to gradually reduce Pakistan’s circular debt burden, which continues to be a major challenge for fiscal management, energy sector sustainability, and overall economic stability.
