Oil & Gas Development Company Limited (OGDCL), Pakistan’s largest exploration and production entity in the oil and gas sector, confirmed that it has received a cumulative Rs. 38.65 billion in interest payments from Power Holding (Private) Limited (PHL). The disclosure was officially communicated to the Pakistan Stock Exchange, reflecting progress under the government’s broader initiative to manage and resolve circular debt within the energy supply chain. The payments are part of a structured settlement designed to improve liquidity and restore financial stability across key institutions linked to the national energy ecosystem.
The repayment plan is based on twelve equal monthly installments of Rs. 7.725 billion each. The process began in July 2025, and the most recent transfer represents the fifth tranche deposited into OGDCL’s accounts. Under this arrangement, the total interest amount scheduled to be repaid to OGDCL stands at Rs. 92 billion. The company indicated that the settlement is proceeding in accordance with a government-approved mechanism aimed at addressing longstanding financial bottlenecks in the sector. Each installment reflects a move toward reducing outstanding liabilities and easing the pressure created by the accumulation of circular debt over several years.
The circular debt issue has continued to challenge the financial landscape of Pakistan’s energy sector, affecting fuel suppliers, power producers, and distribution entities. By ensuring regular payments to companies like OGDCL, the government aims to improve cash flows and reduce operational disruptions triggered by payment delays. For OGDCL, the receipt of these funds offers a buffer that supports its operational commitments, exploration programs, and capital expenditures. As the country’s leading oil and gas exploration and production company, consistent inflows help reinforce its financial position and ability to manage long-term projects vital to national energy security.
The settlement also highlights the government’s effort to revive confidence among major energy stakeholders, many of whom depend on timely payments to maintain production levels and investment pipelines. The structured approach signals an intent to move away from ad-hoc arrangements and toward predictable financial mechanisms. OGDCL’s confirmation of the fifth installment suggests that the repayment schedule is on track, providing assurance to both investors and the broader market.
The continuation of this plan is expected to play a role in mitigating operational strain across the energy value chain. As more installments are completed, it may contribute to a gradual reduction in systemic financial pressure and help restore balance between supply and payment cycles. For the government, this initiative serves as part of a series of measures aimed at revamping the power and petroleum sectors, where liquidity constraints have historically hindered efficiency and expansion.
While the circular debt challenge remains substantial, the progress reported by OGDCL signals incremental movement toward stabilization. The company’s improved liquidity from regular payments could support ongoing exploration activities, enable smoother project execution, and strengthen its overall operational resilience. As the repayment program continues over the coming months, stakeholders across the sector will be closely monitoring its impact on financial reform efforts and the performance of key industry players.
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