Shocking revelations regarding the gas sector and Pakistan State Oil (PSO) were made public in a recent meeting of the Senate Standing Committee on Petroleum.
The committee highlighted the massive problem of circular debt plaguing the gas sector. The CEO of PSO issued an alarming report stating that PSO is in a state of collapse due to outstanding withdrawal of Rs 800 billion from bankrupt government companies.
Officials from the Ministry of Petroleum submitted a detailed report which revealed that the circular debt has grown to 2,897 billion rupees, mainly due to no increase in gas tariff from 2013 to 2023.
The annual shortfall between the official purchase and sale price of gas is Rs 800 billion.
The briefing noted that the big three companies owe a staggering Rs 2,752 billion, which is 95 percent of the total circular debt.
Specifically, Oil and Gas Development Company Limited (OGDCL) owes Rs1,133 billion, PSO owes Rs816 billion and Pakistan Petroleum Limited (PPL) owes Rs803 billion.
The PSO MD further explained that they are to receive Rs 800 billion from various government institutions, including the power sector, PIA and Pakistan Steel Mills, all of which are financially compromised.
Despite the grim financial situation, there was some positive news. The committee was briefed on a potential $5 billion investment in the oil and gas sector.
The offshore exploration initiative is due to start in January 2025 with the issuance of licenses for 24 blocks. Efforts are underway to encourage Chinese state-owned companies to invest in the sector.
