Oil & Gas Development Company Limited (OGDCL) has received Rs7.725 billion as the eighth monthly interest installment from Power Holding (Private) Limited under the government-approved circular debt settlement mechanism, marking continued progress in the implementation of the energy sector’s financial restructuring plan.
The payment is part of a total Rs92 billion interest amount that is being repaid in 12 equal monthly installments. The repayment schedule began in July 2025, with each installment fixed at Rs7.725 billion. The latest transfer reflects adherence to the agreed timeline and signals sustained execution of the federal government’s strategy to ease liquidity pressures across the energy chain.
Circular debt has long posed structural challenges to Pakistan’s power and energy sectors, affecting cash flows, operational efficiency and investor confidence. The settlement mechanism, under which Power Holding (Private) Limited is making scheduled interest payments to OGDCL, is designed to streamline financial obligations and restore balance to the sector’s interconnected payment cycle. By ensuring predictable and timely disbursements, the framework aims to stabilise upstream and downstream financial flows within the energy ecosystem.
OGDCL, as one of Pakistan’s largest exploration and production companies, plays a critical role in domestic hydrocarbon output and energy security. Timely receipt of installment payments strengthens the company’s liquidity position and supports operational continuity, including exploration activities, field development and capital expenditure planning. The structured repayment arrangement also contributes to greater financial visibility for stakeholders monitoring the sector’s reform trajectory.
The Rs92 billion interest component being repaid in equal tranches represents a defined portion of the broader circular debt management plan approved by the government. By distributing repayments evenly over a 12-month period, policymakers aim to avoid sudden fiscal strain while maintaining consistency in obligations to state-owned enterprises and related entities.
Energy sector analysts view the continued execution of the circular debt settlement framework as an incremental but necessary step toward addressing systemic imbalances. Regular installments not only reduce accumulated liabilities but also reinforce confidence in policy continuity. For companies such as OGDCL, steady inflows tied to the mechanism enable more predictable financial planning in a sector historically impacted by delayed receivables and payment bottlenecks.
The government’s broader objective behind the circular debt plan is to introduce financial discipline, enhance transparency in inter-corporate settlements and improve overall sector sustainability. While structural reforms in pricing, governance and distribution efficiency remain central to long-term stability, mechanisms such as the current installment-based repayment structure provide short- to medium-term liquidity relief.
The receipt of the eighth installment indicates that the repayment schedule remains on track since its commencement in July 2025. With four installments remaining under the current arrangement, stakeholders will continue to monitor compliance with the timeline as part of wider efforts to strengthen fiscal management in the energy domain.
OGDCL stated that the latest payment demonstrates continued implementation of the government’s plan to address circular debt, underscoring the coordinated approach being adopted to stabilise Pakistan’s energy sector finances and improve institutional cash flow management across the value chain.
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