Circular debt settlement plan: OGDCL receives 7th interest instalment

KARACHI: Oil and Gas Development Company Limited (OGDCL) has received its seventh consecutive monthly interest payment from Power Holding (Private) Limited (PHL), marking continued progress under the government’s Circular Debt Settlement Plan, the company said on Wednesday.

The instalment amounts to Rs7.725 billion and was disclosed through a notification to the Pakistan Stock Exchange and the London Stock Exchange in accordance with the Securities Act, 2015.

The payment is part of a government-approved mechanism to settle Rs92 billion in accrued interests on Term Finance Certificates (TFCs) through 12 equal monthly installments. The repayment schedule commenced in July 2025 and is expected to conclude by mid-2026.

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According to OGDCL, the latest receipt brings the total interest recovered so far to approximately Rs54 billion.

The interest repayments follow a major settlement reached in June 2024, when the federal government cleared Rs82 billion in principal dues owed to the company as part of broader efforts to reduce circular debt in the energy sector.

Circular debt has long strained Pakistan’s power and energy supply chain, where delayed payments by power producers trigger liquidity shortfalls for fuel suppliers and upstream exploration companies.

OGDCL stated that the continued flow of payments has strengthened its cash position, supporting ongoing exploration and production activities across the country.

Market participants have responded with cautious optimism, viewing the government’s adherence to the repayment schedule as a positive signal of fiscal discipline. Analysts note that sustained progress under the settlement plan could ease financial pressures in the energy sector and help reduce Pakistan’s reliance on imported fuel over the long term.

Copyright Business Recorder, 2026