Islamabad – In a significant step to reduce the crippling circular debt in Pakistan’s energy sector, Oil and Gas Development Company Limited (OGDCL) announced on Thursday that it has received Rs41.8 billion from Uch Power (Private) Limited. The payment, disclosed through a notice to the Pakistan Stock Exchange (PSX), forms part of a broader government initiative to clear outstanding receivables plaguing the power producers and exploration companies.
Sources told Business Recorder that the Central Power Purchasing Agency-Guaranteed (CPPA-G) is facilitating a total payment of Rs89.5 billion to OGDCL on behalf of Uch Power Limited and Uch-II Power through the circular debt financing facility. Notably, the amount will be disbursed as a lump sum instead of the originally planned 18 equal monthly instalments, providing immediate liquidity relief to the state-owned explorer.
The transaction stems from a summary titled “Rationalisation of Late Payment Interest and Potential Reduction for Nuclear Power Plants” (covering Chashma-1 to 4, K-2 and K-3), which was approved by the Economic Coordination Committee (ECC) of the Cabinet.
The accelerated settlement aligns with structural reforms being driven by a high-level Task Force constituted by Prime Minister Shehbaz Sharif on August 4, 2024. The Task Force is mandated to identify and implement far-reaching changes across generation, transmission, distribution, and governance to permanently curb the circular debt, which currently exceeds Rs2.6 trillion.
Market analysts welcomed the development, stating that timely cash flows to OGDCL will strengthen its balance sheet, support ongoing exploration activities, and reduce pressure on the fiscal deficit. Shares of OGDCL closed 1.8% higher on the PSX following the announcement.