PSO, Government and IMF Collaborate on Circular Debt Settlement Plan

PSO, the government and the IMF are drafting a plan to clear circular debt, while the oil marketer reports stable receivables and a market share above 40%.

NationPulse Desk

Oct 29, 2026 · 9:50 AM 3 min read

Key takeaways

PSO, the government and the IMF are drafting a plan to clear circular debt, with receivables unchanged since February 2024.

PSO received about Rs. 10 billion from the Power Division after the fiscal year and Rs. 26 billion from SNGPL in the last quarter.

The company's market share has risen to over 40 percent, mainly since July 2026.

Automation of the retail network is slated for completion by March 2027, potentially altering OMC margins.

Construction of the White Oil Pipeline to Peshawar will begin after pending issues are settled.

Pakistan State Oil (PSO), the government and the International Monetary Fund (IMF) are drafting a scheme to clear the lingering circular debt, with PSO's management noting that its receivables have not changed since February 2024.

During the firm's annual general meeting, officials said PSO had taken in roughly Rs. 10 billion from the Power Division after the fiscal year closed and Rs. 26 billion from Sui Northern Gas Pipelines Limited (SNGPL) in the last quarter.

PSO has reclaimed a market share exceeding 40 percent, largely since July 2026, crediting the rebound to improved product availability, disciplined pricing and efficient supply-chain execution, and stating the profit was not the result of aggressive discounts.

To stay competitive among over 40 oil marketing companies, PSO is revamping its brand, investing in high-volume retail sites and automating its supply chain.

Management anticipates fuel sales across the industry to stay broadly steady or grow modestly, but notes that high petroleum prices, government austerity and rising electric-vehicle and solar uptake are dampening demand. Gasoline demand growth is expected to slow as EV use rises, while a shift from furnace oil to gas could further curb petroleum consumption.

PSO intends to fit EV charging stations at chosen outlets and along major corridors such as Karachi-Hyderabad, Lahore and Rawalpindi-Peshawar, as well as other key cities.

Automation and deregulation

Executives said higher OMC margins hinge on completing retail network automation, including automatic tank gauging systems, and expect to finish upgrades by March 2027, which could qualify them for revised margins. Dealer margins have already risen, while OMC margins stay unchanged until automation requirements are satisfied.

The firm is also gearing up for possible deregulation of the petroleum sector, a move the government is eager to pursue.

PSO stated that QatarEnergy LNG supplies under a government-to-government contract remain profitable on a standalone basis, but an effective tax rate above 50 percent, mainly due to a one-percent minimum tax on LNG turnover, renders the business loss-making after finance costs.

Despite disruptions in the Strait of Hormuz, PSO has taken delivery of 11 QatarEnergy cargoes since March under existing contracts. Winter supply planning is in progress, with the government coordinating procurement and contractual deliveries.

The company said it has no intention to exit LNG provided structural issues are addressed with government backing. LNG-related accounts with SNGPL have been settled, while remaining balances mostly involve government diversion payments owed to the utility.

Local refineries are satisfying about 95 to 97 percent of domestic high-speed diesel demand, PSO noted. Only four to five diesel cargoes have been imported since March 2026, making the price gap between imported and locally produced diesel negligible during that period.

PSO also emphasized the need to broaden crude oil and finished-product suppliers to cut exposure to geopolitical shocks, a priority for the Ministry of Petroleum.

PRL upgrades and White Oil Pipeline

Pakistan Refinery Limited (PRL) remains a strategic asset for PSO, with backward integration viewed as vital for profitability and supply security. The refining sector requires an estimated $5 billion to $6 billion for upgrades, though the financing structure is still undecided.

PSO is discussing upgrade and funding options with PRL, including possible equity deals. Any change to PSO's stake will depend on the refinery's technical study, upgrade needs, Euro V compliance and the identity of a potential partner.

Commercial and tariff talks for the White Oil Pipeline to Peshawar are close to completion, with a few issues still pending. The project, involving PSO, SOCAR and FWO, aims to cut reliance on road transport and improve safe, cost-effective movement of petroleum products. Construction is expected to start once outstanding matters are resolved.