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PSO Eyes Stake Acquisition in Public Sector Energy Firms to Offset Mounting Debt
Pakistan State Oil (PSO) explores acquiring stakes in public sector energy companies to offset mounting debt, including owed amounts from entities like Pakistan International Airlines.
ND
by News Desk
2024-05-09
PSO Eyes Stake Acquisition in Public Sector Energy Firms to Offset Mounting Debt

Pakistan State Oil (PSO) is in discussions with the government regarding a proposal to acquire stakes in public sector energy companies as part of a strategy to offset its mounting debt, including amounts owed by entities such as Pakistan International Airlines (PIA). Syed Muhammad Taha, the managing director and chief executive of PSO, revealed in an interview with Reuters that the plan aims to resolve outstanding receivables through competitive bidding processes.

The proposal, currently under consideration by the government, involves participating in competitive bidding processes for stakes in public sector energy companies. If successful, PSO intends to offset these acquired stakes against its receivables, providing a mechanism to address its outstanding debt obligations. Taha emphasized that all transactions would be conducted transparently through competitive bidding processes.

The initiative comes in response to the pressing need to tackle Pakistan's circular debt crisis, which has reached significant proportions, amounting to approximately Rs4.6 trillion by June 2023, according to the International Monetary Fund (IMF). Circular debt, stemming from delayed payments along the power sector chain, poses a major challenge for entities like PSO, which are integral components of the energy supply chain.

PSO's aggregate receivables from government agencies and autonomous bodies currently stand at Rs499 billion, with outstanding amounts owed by entities such as Sui Northern Gas. To address this challenge, PSO is exploring various avenues, including acquiring stakes or complete ownership of assets such as power plants, as well as equity stakes in profitable public sector companies like Oil and Gas Development Co (OGDC).

Furthermore, PSO is actively engaged in broader initiatives such as the privatization of PIA, which involves potential asset swaps and stakes in non-core assets of the airline. The government's efforts to reform the public sector, in line with IMF directives, are integral to addressing the country's fiscal challenges and promoting economic stability.

As economic conditions improve, PSO anticipates modest growth in petroleum product demand, driven by factors such as lower interest rates and increased disposable income. Collaborative efforts with strategic investors from China and the Middle East are underway to enhance and expand Pakistan's refinery infrastructure, positioning PSO for future growth and sustainability in the energy sector.
Tagged:

PSO

EnergySector

DebtRelief
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