Pakistan State Oil (PSO), the country’s largest fuel marketing company, is facing a deepening PSO liquidity crisis as mounting unpaid receivables from Pakistan’s gas and power sectors continue to strain its financial position. Industry experts warn that the worsening cash flow situation could disrupt fuel procurement, delay payments to suppliers, and pose risks to the country’s overall energy security if immediate corrective measures are not taken.
According to independent industry data, the largest share of overdue payments is owed by Sui Northern Gas Pipelines Limited (SNGPL). As of July 23, 2026, SNGPL’s outstanding liabilities to PSO had reached Rs536 billion, making it the single biggest contributor to the company’s growing receivables.
Outstanding SNGPL Dues Continue to Strain PSO
The outstanding amount includes Rs274 billion in principal dues and an additional Rs253 billion in late payment surcharge (LPS), reflecting years of delayed settlements. Industry sources said the accumulation of unpaid bills continues to place enormous financial pressure on PSO, which is responsible for importing liquefied natural gas (LNG) and ensuring uninterrupted fuel supplies across the country.
Sources familiar with the matter said recoveries from SNGPL have failed to keep pace with the cost of ongoing imported LNG cargoes. While PSO continues to make timely payments to international LNG suppliers under contractual obligations, delayed recoveries from the gas utility have created a persistent cash flow mismatch.
Power Sector Receivables Add to the Liquidity Crisis
The PSO liquidity crisis has also been aggravated by rising receivables from Pakistan’s power sector. Industry figures show that outstanding payments from power companies have climbed to Rs168 billion, with a substantial portion of these dues remaining unpaid since the 2018-19 fiscal year.
Analysts say the prolonged non-payment by entities across the energy sector has created a financial bottleneck affecting the entire fuel supply chain. The growing stockpile of receivables has reduced PSO’s financial flexibility and increased pressure on its working capital, making it more difficult for the company to fulfil its obligations to both domestic and international partners.
Rising Borrowing Increases Financial Pressure
The liquidity constraints are not limited to delayed recoveries alone. To maintain fuel imports and continue normal operations, PSO has increasingly relied on short-term borrowing from commercial banks. While these loans provide temporary financial relief, they also result in higher financing costs through increased debt servicing, placing an additional burden on the company’s balance sheet.
Industry observers note that the company’s available banking limits are gradually shrinking as borrowing requirements continue to rise. This situation could eventually limit PSO’s ability to secure additional financing needed to support future fuel imports if outstanding receivables remain unresolved.
Supply Chain Risks Extend Across the Energy Sector
The financial pressure is also being felt across Pakistan’s downstream petroleum industry. Domestic oil refineries depend on timely payments from PSO to maintain crude oil purchases and refinery operations. Likewise, international fuel suppliers expect payments under agreed contractual timelines to ensure uninterrupted deliveries of crude oil, petroleum products, and LNG cargoes.
Any prolonged delay in payments could have wider implications for Pakistan’s energy sector by affecting refinery operations, disrupting fuel procurement schedules, and weakening confidence among foreign suppliers. Energy experts caution that maintaining a stable fuel supply chain requires uninterrupted cash flows throughout the entire energy ecosystem.
Circular Debt Remains the Core Challenge
Analysts believe the PSO liquidity crisis reflects broader structural issues within Pakistan’s energy sector, particularly the longstanding problem of circular debt. Delayed payments between government entities, power producers, gas utilities, and fuel suppliers continue to create financial stress throughout the sector, limiting investment and increasing operational risks.
Experts argue that resolving these challenges will require more than short-term financial support. They emphasise the need for a comprehensive government-led settlement mechanism to clear outstanding receivables, improve payment discipline across state-owned entities, and prevent further accumulation of unpaid dues.
Without such measures, analysts warn that PSO’s financial position could deteriorate further, potentially affecting its ability to procure fuel, import LNG, and maintain stable supplies of petroleum products across the country. Given PSO’s central role in Pakistan’s energy supply chain, any disruption to its operations could have significant consequences for industries, electricity generation, transportation, and households.
Key Takeaways
Industry stakeholders have therefore urged the government to implement an immediate and structured settlement plan to restore liquidity across the energy sector. They argue that timely resolution of outstanding dues is essential not only for improving PSO’s financial health but also for safeguarding Pakistan’s long-term energy security and ensuring uninterrupted fuel availability in the months ahead.