Delayed PIA land transfer leaves PSO exposed to PKR 30 billion hit

State-run oil marketing company Pakistan State Oil is facing a financial setback after receivables of about PKR 30 billion remain stuck with Pakistan International Airlines, industry sources said, as the national carrier has yet to transfer a key real estate asset promised to settle the dues.

The outstanding amount relates to unpaid jet fuel supplies provided by PSO to PIA.

Despite the completion of PIA’s privatization process, the Islamabad land earmarked for settlement has not been transferred, officials familiar with the matter said.

“The understanding was clear that PSO’s receivables would be settled through the transfer of PIA’s Islamabad real estate, but that has not happened so far,” an industry official told on condition of anonymity due to the sensitivity of the issue.

The federal government earlier declared a consortium led by the Arif Habib Group as the successful bidder for a 75% stake in PIA. While the group submitted a bid of PKR 135 billion, the effective sale value stood at PKR 10 billion, as the buyer is required to inject PKR 125 billion into the airline as part of the transaction.

PSO had approached the government during the privatization process, seeking the transfer of PIA’s Islamabad property to settle the mounting receivables. As the unpaid amount climbed to PKR 30 billion, discussions were held between the two state-owned entities to resolve the issue through the land transfer.

According to a letter sent by PSO management to Privatization Commission Chairman and Adviser on Privatization Muhammad Ali, the oil company highlighted the urgency of settling the outstanding dues and transferring the real estate asset in its favor.

In the letter, PSO said that the two companies reconciled their accounts on March 21, 2024, determining that PIA’s total outstanding payables as of the Sept. 30, 2023 cut-off date amounted to PKR 23.8 billion.

“Based on the federal cabinet’s decision of Feb. 5, 2024, PSO issued its consent on March 22, 2024, with the understanding that PIA’s Islamabad plot, valued at around PKR 15 billion, would be transferred to PSO, subject to federal approval,” the letter said.

PSO and PIA also agreed that receivables of PKR 8.8 billion would be shifted to the books of PIA Holding Company, the management said.

“Since the privatization process of PIACL was completed on Dec. 23, 2025, we request the Privatization Ministry to ensure the transfer of the Islamabad real estate plot in favor of PSO,” the letter added.

Industry officials said PSO has been under financial strain since the cabinet approved the settlement framework, but the delay in executing the land transfer has worsened the situation.

“Although the privatization transaction has been concluded, PSO has received nothing in return,” said another energy sector official. “If the matter is not resolved, PSO could end up being the first casualty of the privatization process.”