OGDC gets 10th circular debt interest payment of Rs7.7bn

Pakistan’s energy-sector debt cleanup moved another step forward on Friday after Oil and Gas Development Company Limited announced that it had received Rs7.725 billion as its tenth monthly interest payment under the government’s circular debt settlement plan. The payment, made by Power Holding (Private) Limited, was disclosed in a notice to the Pakistan Stock Exchange and signalled that the repayment schedule remains on track at a time when the country is trying to stabilise the finances of its power and fuel chain.

The latest transfer is not a one-off release but part of a fixed twelve-installment structure. Under the arrangement, OGDCL is due to receive equal monthly interest payments tied to an earlier settlement approved by the federal government. Friday’s installment means the company has now collected ten of the twelve scheduled monthly interest payments, leaving only two more to complete this phase of the plan.

In its stock-market filing, the company said the Rs7.725 billion payment was received as interest from Power Holding (Private) Limited under a government-approved mechanism. OGDCL also reminded investors that the total interest amount to be repaid is Rs92 billion, distributed across twelve equal monthly installments that began in July 2025. The company presented the latest payment as evidence that the state-backed settlement process is continuing without interruption.

The official communication was brief, but the message was clear. OGDCL framed the payment as continued progress in the government’s effort to tackle circular debt in the energy sector. That matters because circular debt is not just an accounting issue in Pakistan. It is a chain reaction of unpaid bills that stretches across power producers, fuel suppliers, refineries, gas companies and public utilities, often weakening the entire supply system when one part falls behind.

The roots of the current repayment schedule go back to June 2024, when the government approved a wider settlement linked to OGDCL’s investment in Privately Placed Term Finance Certificates issued by Power Holding. At that stage, the government cleared Rs82 billion representing the principal amount tied to those certificates. It also approved repayment of Rs92 billion in interest through monthly installments starting from July 2025. As part of that settlement, OGDCL agreed to waive Rs72 billion in liquidated damages on government directives, making the package both a recovery arrangement and a compromise.

That earlier structure is important because it shows why the issue carries weight beyond one company’s balance sheet. OGDCL had subscribed to the certificates to help settle overdue receivables from oil refineries and gas companies, meaning the problem was linked to broader payment stress already embedded in the energy chain. When such dues remain unresolved for long periods, they reduce liquidity, limit investment capacity and increase pressure on firms that are expected to keep producing and supplying energy even while their own recoveries are delayed.

The company itself occupies a central place in Pakistan’s energy landscape. OGDCL was incorporated in 1997 as the corporate successor to the Oil and Gas Development Corporation, which dates back to 1961. As one of the country’s largest exploration and production firms, its cash position matters not only to shareholders but also to the wider energy system. Regular inflows under the settlement plan can support planning, improve confidence around receivables and reduce uncertainty for a business that plays a major role in domestic oil and gas output.

For Pakistan, the latest payment offers a modest but meaningful sign that at least one strand of the circular debt problem is being handled in an orderly way. It does not mean the broader crisis has been solved. The real test is whether the state can prevent fresh arrears from piling up while completing the remaining installments and pushing structural reforms in billing, recovery, pricing and transmission efficiency. If those deeper problems remain unaddressed, periodic repayments will provide relief but not a lasting cure. For now, the tenth installment gives OGDCL another scheduled recovery and gives policymakers one more marker of progress in a sector still burdened by years of financial imbalance.