Pakistan State Oil (PSO) reduced its trade receivables by Rs22.7 billion during fiscal year 2025-26, bringing the outstanding amount down to Rs414.8 billion from Rs437.5 billion a year earlier. The reduction provided some relief to the state-owned oil marketing company as lower receivables, combined with declining discount rates, helped bring finance costs down by 24%. Despite the improvement in collections, PSO continued to face liquidity pressures, while higher operating expenses and taxation affected the company’s overall earnings performance during the year.
According to PSO’s FY26 annual report, net receivables from Sui Northern Gas Pipelines Limited (SNGPL), GENCOs and PIA Holding Company stood at Rs357.5 billion. SNGPL remained the company’s largest debtor, although its outstanding dues declined to Rs276.1 billion from Rs310 billion in FY25. Receivables from GENCOs stood at Rs67.6 billion, while the amount owed by PIA Holding Company was recorded at Rs13.8 billion. The decline in these major receivables supported PSO’s financing position, but the company’s balance sheet continued to reflect significant amounts tied up in outstanding payments.
PSO’s gross profit increased to Rs99.9 billion in FY26 from Rs96.7 billion in the previous year. Excluding the LNG business, gross profit recorded a stronger increase of 20.5%, reaching Rs81.9 billion compared with Rs67.9 billion in FY25. The petroleum products business was a major contributor to this performance, with net sales rising 11.7% year on year to Rs2.41 trillion. Gross profit from the segment increased 19.7% to Rs80.8 billion. Despite the improvement in sales and gross profit, profit after tax from the petroleum products segment declined 13.1% to Rs20.7 billion, reflecting the impact of costs and taxation on earnings.
The company’s other receivables also increased during the year, rising 20.8% to Rs173.9 billion. PSO attributed the increase mainly to the recognition of Rs24.2 billion in price-differential claims receivable from the government following the introduction of the Price Differential Claim mechanism for petrol and high-speed diesel. PSO reported that Rs24.2 billion had already been reimbursed, while the remaining amount was being pursued with the government and the Oil and Gas Regulatory Authority. At the same time, sales tax refundable increased by 12% to Rs83.1 billion, adding another significant amount to the company’s outstanding recoverables.
The LNG business remained a major source of pressure for PSO during FY26. Net sales from the segment declined 35.8% to Rs630.6 billion, while gross profit fell 37.2% to Rs18.1 billion. PSO linked the weaker performance primarily to supply disruptions around the Strait of Hormuz, which affected cargo availability and reduced regasified liquefied natural gas volumes. As a result, the LNG segment recorded a loss of Rs7.9 billion during the year. The decline in LNG activity contrasted with the stronger performance of the petroleum products business and contributed to pressure on the company’s overall profitability.
PSO’s short-term borrowings increased 7.9% during FY26 to Rs384.3 billion from Rs356.1 billion, mainly because of higher local-currency borrowing. The company also continued investing in its physical infrastructure and retail network. Storage capacity increased to 1.23 million tonnes after PSO rehabilitated around 39,000 tonnes of capacity during the year. Its retail network expanded by 92 outlets, reaching 3,688 locations nationwide. The expansion reflects the company’s continued focus on strengthening its supply and retail infrastructure despite financial pressures across the energy sector.
For FY27, PSO has identified several infrastructure and energy transition initiatives among its key priorities. These include the White Oil Pipeline, site solarisation and the development of electric vehicle charging infrastructure. The planned initiatives indicate that PSO is looking beyond conventional fuel distribution while continuing to strengthen its logistics, storage and retail capabilities. At the same time, managing receivables, government claims, borrowing requirements and LNG-related exposure is likely to remain important for the company’s financial position as it enters the new fiscal year.
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