OGDC circular debt settlement continues to move forward as Oil & Gas Development Company Limited (PSX: OGDC) has successfully received the sixth monthly interest installment under the Term Finance Certificates (TFCs) issued by Power Holding (Private) Limited (PHL). The payment forms part of the government-approved circular debt settlement mechanism aimed at stabilizing Pakistan’s energy sector.
The latest installment amounts to Rs 7.725 billion, reflecting steady progress in the structured repayment plan designed to ease liquidity pressures across state-owned energy entities.
OGDC Circular Debt Settlement: Payment Details and Structure
Under the approved framework, OGDC is entitled to twelve equal monthly interest payments, totaling Rs 92 billion in interest obligations. The repayment schedule commenced in July 2025 and will conclude in June 2026, subject to timely disbursements.
Key Highlights of the Sixth Payment
• Payment Amount: Rs 7.725 billion
• Installment Number: Sixth of twelve
• Instrument: Term Finance Certificates (TFCs)
• Issuer: Power Holding (Private) Limited (PHL)
• Framework: Government of Pakistan’s circular debt settlement plan
The receipt of this installment reinforces the government’s commitment to honoring financial obligations under the circular debt resolution strategy.
Why the OGDC Circular Debt Settlement Matters
The OGDC circular debt settlement is a critical component of Pakistan’s broader effort to address long-standing inefficiencies in the energy sector. Circular debt has historically constrained cash flows, delayed payments to upstream exploration and production (E&P) companies, and discouraged fresh investment.
For OGDC, Pakistan’s largest E&P company the timely receipt of TFC interest payments improves:
• Cash flow visibility
• Balance sheet strength
• Dividend sustainability
• Investor confidence
Consistent inflows also allow OGDC to maintain capital expenditure on exploration, production enhancement, and energy security initiatives.
Government-Approved Circular Debt Framework Explained
The circular debt settlement mechanism was approved to convert outstanding payables into marketable debt instruments, primarily TFCs, issued through Power Holding (Private) Limited. This approach enables:
• Predictable repayment schedules
• Reduced pressure on government guarantees
• Improved financial discipline across power sector entities
Interest payments are spread over a 12-month horizon, ensuring manageable fiscal impact while restoring confidence among energy sector stakeholders.
OGDC Circular Debt Settlement and Market Impact
The steady progress in the OGDC circular debt settlement is likely to be viewed positively by:
• Equity investors, who prioritize earnings stability
• Credit rating agencies, assessing sovereign-linked exposure
• Institutional funds, focused on dividend-yielding stocks
On the Pakistan Stock Exchange (PSX), OGDC remains a blue-chip energy stock, and predictable cash inflows from TFCs strengthen its defensive investment profile amid macroeconomic uncertainty.
What Lies Ahead for OGDC?
With six out of twelve installments received, OGDC is now halfway through the interest repayment cycle. Continued adherence to the payment schedule will be crucial in:
• Sustaining operational momentum
• Supporting future exploration projects
• Reinforcing trust in government-led financial reforms
Market participants will closely monitor upcoming installments as a barometer of fiscal discipline and reform continuity in Pakistan’s energy ecosystem.
The receipt of the sixth TFC interest payment marks another important milestone in the OGDC circular debt settlement process. As Pakistan works to resolve structural issues in its power and energy sectors, consistent execution of such frameworks remains vital for economic stability, investor sentiment, and long-term energy security.