Pakistan State Oil (PSO) is currently navigating a complex financial challenge as receivables totaling approximately Rs30 billion from Pakistan International Airlines (PIA) remain unsettled. The state-run oil company had anticipated that the dues could be partially cleared through the transfer of PIA’s Islamabad real estate, valued at around Rs15 billion, but the transaction remains incomplete despite the airline’s privatisation.
The privatisation of PIA, in which a consortium led by the Arif Habib Group acquired the airline for Rs135 billion, included conditions requiring the buyer to invest an additional Rs125 billion into the airline. PSO, which has consistently supplied jet fuel to PIA, had requested that the government facilitate the transfer of the Islamabad property to offset outstanding payables. However, the land has not been handed over, leaving PSO in a state of financial limbo.
According to a PSO spokesperson, the company continues to assert its full claim over the dues and will maintain this stance until the legal transfer of assets is finalised. The total receivables now stand at Rs30.15 billion, which include both the principal amounts owed as well as late payment charges accrued over time. PSO management has formally approached the Privatisation Commission to expedite the transfer of the Islamabad property, referencing an earlier agreement that reconciled PIA’s accounts in March 2024. As of September 30, 2023, PIA’s total outstanding payables were calculated at Rs23.8 billion.
The situation is further complicated by a cabinet decision in February 2024, which allowed PSO to issue a consent letter agreeing to the property transfer, contingent on federal government approval. Despite these formal approvals, the transfer has yet to materialise. Industry insiders caution that unresolved dues could have broader implications for the privatisation process and warn that PSO may be the first stakeholder adversely affected by delays in executing the agreed terms.
Analysts highlight that the delay underscores broader challenges in asset transfers tied to state-owned enterprises in Pakistan, where agreements are often drawn up during privatisation but face delays in execution due to bureaucratic or regulatory hurdles. For PSO, the outstanding receivables represent a significant financial exposure that could impact liquidity and operational planning if not resolved promptly.
The unresolved matter also raises questions about the effectiveness of post-privatisation frameworks in ensuring that state-run entities receive due compensation for ongoing contractual obligations. PSO officials have reiterated their commitment to pursuing the full claim through legal and administrative channels, while urging the Privatisation Commission and relevant authorities to implement the earlier agreements without further delays.
As the situation develops, stakeholders across Pakistan’s energy and aviation sectors are closely watching the resolution process, noting that timely action is crucial for maintaining confidence in the ongoing privatisation initiatives and for safeguarding the financial health of critical state-owned companies such as PSO.
The case highlights the intersection of government policy, state asset management, and private sector investment, illustrating the need for structured follow-up mechanisms to ensure that agreements, especially those involving high-value assets like Islamabad real estate, are executed efficiently and transparently.
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