OGDCL Faces Crisis With Rs. 250 Billion in Circular Debt Against Power Sector

Managing Director of Oil and Gas Development Authority (OGDCL), Zahid Mir, has revealed that the public sector entity is facing a severe liquidity crisis because of its stuck-up debt of Rs. 250 billion against the power sector.

The large and longstanding amount of circular debt is creating trouble for the entire energy sector.

The MD OGDCL said, “Our stuck up debt in power sector has gone up to Rs250 billion as outstanding liabilities against two major gas utilities stand at Rs95 billion and Rs50 billion against Sui Southern Gas Company and Sui Northern Gas Company respectively as well as over Rs100 billion against Power Holding Company.”


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Mir revealed this while addressing an event “Pak Oil and Gas Igniting Growth.”

On the occasion, Prime Minister’s Special Assistant on Power, Shahzad Qasim, said that the government will borrow through Islamic Sukuk to remove the liquidity crunch in the power sector. This decision will also ease the tension and make room for the critical reforms in the sector.

He announced that the losses in the power sector will be reduced to 15 percent, down from 30 percent, to prevent the accumulation of circular debt again.

The minister said that the reason for accumulating circular debt was a disparity between the generation cost and the recovered cost per unit. He also announced that the government will choose certain portions of liabilities for the power sector subsidy and will fill the remaining by reducing theft and line losses.