Pakistan State Oil (PSO), the government and the International Monetary Fund (IMF) are working on a plan to settle outstanding circular debt, with the company’s management saying its receivables have remained unchanged since February 2024.
At the company’s annual general meeting, management said PSO had received around Rs. 10 billion from the Power Division after the financial year ended and Rs. 26 billion from Sui Northern Gas Pipelines Limited (SNGPL) during the final quarter.
PSO has recovered its market share to more than 40 percent, with most gains recorded since July 2026. Management attributed the recovery to better product availability, pricing discipline and supply chain execution, saying it was profitable and not driven by aggressive discounts.
To maintain its position among more than 40 oil marketing companies, PSO is refreshing its brand, investing in high-volume retail outlets and automating its supply chain.
Management expects industry fuel sales to remain broadly stable or grow modestly. However, high petroleum prices, government austerity measures and rising EV and solar adoption are weighing on demand. Gasoline demand growth is expected to slow as EV use increases, while the shift from furnace oil to gas may further affect petroleum consumption.
PSO plans to install EV charging facilities at selected outlets and along major routes, including Karachi-Hyderabad, Lahore and Rawalpindi-Peshawar, as well as in other key cities.
Automation and deregulation
Management said higher OMC margins depend on completing retail network automation, including automatic tank gauging systems. PSO expects to finish the upgrades by March 2027, potentially qualifying for revised margins. Dealer margins have already increased, while OMC margins remain unchanged until the automation requirements are met.
The company is also preparing for potential petroleum sector deregulation, which the government is keen to pursue.
PSO said QatarEnergy LNG supplies under a government-to-government contract remain profitable on a standalone basis. However, an effective tax rate above 50 percent, largely due to a one percent minimum tax on LNG turnover, makes the business loss-making after finance costs.
Despite disruptions in the Strait of Hormuz, PSO received 11 QatarEnergy cargoes since March under existing contracts. Winter supply planning is underway, with the government coordinating procurement and contractual deliveries.
PSO said it had no plans to exit LNG, provided structural issues were resolved with government support. LNG-related accounts with SNGPL have been reconciled, while remaining amounts largely involve government diversion payments owed to the utility.
Local refineries are meeting around 95 to 97 percent of domestic high-speed diesel demand, PSO said. Only four to five diesel cargoes have been imported since March 2026, making the price differential between imported and locally produced diesel negligible during the period.
The company also stressed the need to diversify crude oil and finished-product suppliers to reduce exposure to geopolitical disruptions. The Ministry of Petroleum is prioritizing a broader supplier base.
PRL upgrades and White Oil Pipeline
Pakistan Refinery Limited (PRL) remains a strategic asset for PSO, with backward integration seen as important for profitability and supply security. The refining industry needs an estimated $5 billion to $6 billion for upgrades, but the funding structure remains undecided.
PSO is discussing upgrade and financing options with PRL, including possible equity arrangements. Any change to PSO’s stake will depend on the refinery’s technical study, upgrade needs, Euro V compliance and the identity of a potential partner.
Commercial and tariff negotiations for the White Oil Pipeline to Peshawar are nearing completion, with a few issues unresolved. The project, involving PSO, SOCAR and FWO, aims to reduce road transport reliance and improve the safe, cost-effective movement of petroleum products. Construction is expected to begin once outstanding matters are settled.
The post PSO, Govt and IMF Work on Plan to Clear Circular Debt appeared first on ProPakistani.
