Collection Ratio Crosses 100% in 4QFY26
Oil and Gas Development Company (OGDC) recovered more than it billed on gas during the last quarter of FY26, but nearly Rs595 billion remains tied up in trade debts on the company’s books.
According to Optimus Capital, OGDC’s gas sales collection ratio reached 106% in 4QFY26, while outstanding trade debts declined 3% year-on-year to Rs594.8 billion.
The collection ratio above 100% indicates that OGDC collected current gas bills as well as a portion of previously outstanding arrears. While this represents an improvement in cash recovery, it has not materially resolved the company’s overall receivables overhang.
Trade Debt Buildup Shows Some Improvement
Optimus Capital’s analysis shows that the buildup in trade debts relative to gas sales turned negative in June 2026 after rising sharply in March.
Both trade-debt changes and lease receivables contracted during the latest quarter, reversing some of the buildup recorded earlier in the year.
However, the overall stock of trade debts remains close to Rs600 billion. The scale of the receivables means the improvement in quarterly collections has yet to translate into a meaningful resolution of OGDC’s long-standing liquidity overhang.
Sui Companies Remain Major Source of Dues
A significant portion of OGDC’s overdue receivables is linked to Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), within the broader inter-corporate circular debt chain.
Company filings earlier in FY26 showed overdue circular-debt receivables of more than Rs530 billion, with the majority owed by the two Sui companies.
The government has also deferred the application of expected-credit-loss rules on certain government-linked dues until the end of 2026. These receivables continue to be treated as recoverable because the state has assumed responsibility for the obligations.
However, an assumption of responsibility does not immediately translate into cash. Until the dues are settled, OGDC effectively continues to finance the gas utilities through its balance sheet.
Pakistan’s Gas Circular Debt Remains a Major Challenge
The wider gas-sector circular debt remains substantial, with the stock estimated at around Rs3.6 trillion when the late-payment surcharge is included.
Plans to clear approximately Rs1.5 trillion through measures including additional dividends from state-owned enterprises, a petroleum levy and reductions in LNG cargoes have been presented to the cabinet and discussed with the International Monetary Fund.
Despite these efforts, there has yet to be a decisive reduction in OGDC’s Rs594.8 billion trade-debt position.
SNGPL continues to carry significant receivables and surcharge obligations, highlighting why improvements in producer collections can occur without producing a comparable reduction in the accumulated stock of unpaid dues.
Strong FY26 Profit Supports Record Dividend
OGDC reported a 43% increase in FY26 profit to Rs242 billion and recommended a record dividend of Rs17 per share.
Improved recoveries and tariff adjustments contributed to stronger cash generation and helped support the proposed payout.
However, the stronger earnings and dividend do not mean the legacy receivable has been eliminated.
Receivables Continue to Tie Up OGDC’s Balance Sheet
The nearly Rs595 billion locked in trade debts represents funds that cannot be freely deployed by OGDC for new drilling, faster field development or potentially higher shareholder distributions.
For investors, the distinction between cash-flow improvement and balance-sheet cleanup remains important.
The 106% collection ratio is a positive development because it indicates that OGDC is recovering current dues along with portions of older arrears. Yet the Rs594.8 billion trade-debt stock shows that the underlying circular-debt problem remains unresolved.
Circular Debt Resolution Remains Key for Investors
OGDC’s FY26 performance demonstrates that stronger collections can improve cash generation and support shareholder payouts even while substantial receivables remain outstanding.
The bigger question is whether government plans to address Pakistan’s circular debt will ultimately translate into actual cash settlements for producers.
Until that happens, OGDC’s 106% collection ratio should be viewed as a quarterly improvement rather than a complete solution to the company’s long-standing receivables problem.