OGDCL receives seventh interest payment under circular debt plan

Pakistan’s Oil and Gas Development Company Limited has received its seventh consecutive monthly interest payment from Power Holding (Private) Limited, the company has said, signaling continued progress under the government’s circular debt settlement plan.

The latest installment totaled PKR 7.725 billion ($27.8 million) and was disclosed through a notification to the Pakistan Stock Exchange and the London Stock Exchange under the Securities Act of 2015.

The payments are part of a government-approved mechanism to settle PKR 92 billion in accrued interest on Term Finance Certificates through 12 equal monthly installments.

The repayment schedule began in July last year and is expected to conclude by mid-2026.

OGDCL said the latest receipt brings the total interest recovered so far to about PKR 54 billion.

The interest payments follow a major settlement in June 2024, when the federal government cleared PKR 82 billion in principal dues owed to the company as part of broader efforts to address circular debt in Pakistan’s energy sector.

Circular debt has long strained the country’s power and energy supply chain, as delayed payments by power producers create liquidity shortages for fuel suppliers and upstream exploration companies.

OGDCL said the steady flow of payments has strengthened its cash position, supporting ongoing exploration and production activities nationwide.

Market participants have reacted with cautious optimism. “The government’s ability to stick to the repayment schedule is a constructive signal for the sector,” said an energy analyst. “If this momentum continues, it could gradually ease financial stress across the energy value chain and reduce Pakistan’s dependence on imported fuels over the medium to long term.”

Shares of OGDCL were little changed in early trading, reflecting investor expectations that sustained implementation of the settlement plan will be key to restoring confidence in the sector.