According to news sources, Petroleum Division is currently seeking the Economic Coordination Committee’s approval for the conversion of TFCs worth PKR 202.8bn of OGDC owed by Power Holding Private Limited into PIBs. To recall, in 2013, the government approved the TFCs for partial payment of circular debt amounting to PKR 82bn, for the purpose of settling companies’ overdue receivables from oil refineries and gas companies.

Originally, these TFCs had a tenure of 7 years, which was extended to a further 3 years in 2017. The unpaid interest payment and liquidated damages have reached PKR 55.6bn and PKR 65.2bn, respectively as of Mar’22. The company may consider various options for utilization of these funds:  i) announce a one-time dividend, which could partially re-rate multiples, or ii) retain cash for new exploration prospects or further investments in new projects.

Courtesy- AHL Research