PSO starts talks on stake in companies in lieu of dues – Business & Economy

Pakistan State Oil (PSO), the country’s largest oil marketer, says it is working with the government on plans to acquire stakes in public sector energy companies in lieu of debt and to meet the mounting debt of firms such as National Airlines. is talking

Everything will be done through competitive bidding and we will participate, if we win, shares will be taken once morest PSO’s receivables,” says Syed Muhammad Taha, chief executive and managing director of PSO.

“This is our proposal and it is under consideration, so we are working with the government,” Taha said.

The government of Pakistan is the largest shareholder of PSO with regarding 25 percent stake, but the rest are owned by private shareholders.

The IMF says Pakistan’s power and gas sectors had total revolving debt of 4.6 trillion rupees ($17 billion) or regarding 5 percent of GDP as of June 2023.

Revolving debt is a form of public debt that arises from the power sector’s failure to pay its obligations to China, starting with consumers and passing on to distribution companies, which owe arrears to power plants. are, they then have to pay the PSO supplying the fuel.

The government is either the largest shareholder or majority owner of these companies, making it difficult to resolve debt as fiscal tightening creates a cash crunch.

Among other measures called for by the IMF, Pakistan has raised energy prices to prevent debt build-up. But the deposit is still to be settled.

Taha said IMF reforms helped the sector by increasing borrowers’ ability to pay, which would continue to improve.

PSO’s total collection from state-owned and autonomous entities was 499 billion rupees ($1.8 billion), with gas supplier Sui Northern Gas accounting for the largest share, whose largest shareholder is the government. .

The PSO’s annual report last year said that the overdue debt crisis was a serious problem for it.

Taha said the PSO had initially floated the idea of ​​acquiring full ownership of assets such as power plants at Nandipur in northern Punjab province and Guddu in southern Sindh, as well as a government-owned holding company for power generation companies.

He added that he also discussed equity stakes in profitable public sector companies such as the Oil and Gas Development Company.

PIA Agreement

Taha said the PSO is also part of a broader settlement framework for the privatization of Pakistan International Airlines, which would likely include a “clean asset swap” and stake in the airline’s non-core assets such as real estate.

The government is taking a 51 percent to 100 percent stake in the debt-ridden PIA as part of public sector reforms called for by the IMF.

In March, the media reported that PIA owed regarding 15.8 billion rupees ($57 million) for fuel supply to PSO.

With economic conditions improving, he added, PSO is working with major strategic investors from China and the Middle East to upgrade and expand its refinery arm, Pakistan Refinery Limited.