Pakistan’s largest oil and gas explorer, Oil and Gas Development Company Ltd. (OGDC), has seen a marked improvement in cash flows in recent quarters, driven by stronger recovery of receivables and interest payments, Insight Securities said in a research note.
The brokerage said OGDC has received cumulative cash inflows of PKR 96 billion, or PKR 22.4 per share, so far in the current fiscal year. The inflows were primarily supported by repayments of Term Finance Certificates (TFCs) and partial settlement of long-outstanding receivables from UCH Power.
On the TFC front, Insight Securities noted that six installments remain outstanding, amounting to PKR 46.3 billion, or PKR 10.8 per share. These payments are expected over the next six months, providing visibility on near-term cash inflows.
Receivables from UCH Power stood at PKR 59 billion as of October, according to the brokerage. Against this amount, OGDC has already received PKR 51 billion, implying that the remaining balance could translate into additional cash inflows going forward.
Insight Securities said OGDC’s recovery ratio has strengthened significantly in recent years, improving to 105% in FY25 from 89% in FY24 and 74% in FY23. The ratio remains healthy at 101% in the first quarter of FY26, reflecting continued improvement in cash collections.
Despite the progress, OGDC continues to carry sizeable receivables of PKR 533 billion, or PKR 122 per share, from Sui gas companies. Insight Securities said resolution of gas sector circular debt remains a key focus area for authorities, who are actively working on a settlement mechanism.
According to recent news flows cited by the brokerage, the Petroleum Division has proposed settling PKR 1.7 trillion of gas sector circular debt through a combination of dividends from state-owned enterprises, an increase in the petroleum levy and savings from diverted LNG cargoes. The government has recently raised the petroleum levy by PKR 4.65 per litre on petrol and PKR 0.80 per litre on diesel, which could potentially generate around PKR 4.5 billion per month.
Insight Securities noted that Pakistan Petroleum Ltd. (PPL) is another major beneficiary of any such settlement, with receivables from Sui companies amounting to PKR 579 billion, or PKR 213 per share.
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