Pakistan State Oil remains exposed to Rs30 billion after Pakistan International Airlines failed to transfer agreed real estate assets.
Pakistan State Oil, the country’s largest oil marketing company, is facing a fresh financial setback after receivables of about Rs30 billion from Pakistan International Airlines remain unpaid, according to official correspondence seen by this publication. The dues relate primarily to jet fuel supplies provided to the national flag carrier over several years and were expected to be settled through an asset transfer as part of PIA’s privatization process.Govt Makes Second Effort To Privatize PIA
The issue has resurfaced after the government completed the privatization transaction of Pakistan International Airlines Corporation Limited in December 2025, without the transfer of an Islamabad real estate plot that had been earmarked for settlement. PSO officials say no land has been transferred so far, despite earlier understandings endorsed at the cabinet level.
According to PSO management, the total outstanding receivable from Pakistan International Airlines currently stands at Rs30.15 billion, including the principal amount and accumulated late payment surcharges. The company has maintained its full claim and says it will continue to do so until a legally binding asset transfer is completed in its favor.
In a formal letter sent to Muhammad Ali, Chairman of the Privatization Commission and Special Assistant to the Prime Minister on Privatization, PSO drew attention to what it described as a critical unresolved component of the airline’s restructuring. The letter referred specifically to the settlement of PSO receivables through the transfer of a prime Islamabad real estate plot owned by Pakistan International Airlines Corporation Limited.
The matter dates back to March 2024, when PSO and PIACL reconciled their accounts as part of preparatory work for privatization. At that stage, the total outstanding payable by PIACL at the cut-off date of September 30, 2023, was determined at Rs23.8 billion, according to company records.
Subsequently, following a cabinet decision taken on February 5, 2024, PSO issued a formal consent letter on March 22, 2024. That consent was provided with the explicit understanding that an Islamabad real estate asset, estimated at around Rs15 billion, would be transferred to PSO, subject to federal government approval.
The remaining receivables, amounting to Rs8.8 billion, were to be transferred to the books of a holding company created as part of PIA’s restructuring plan. This structure was intended to clean up the airline’s balance sheet ahead of privatization and ring-fence legacy liabilities, according to officials familiar with the process.
Despite these arrangements, PSO officials say the asset transfer never materialized. They add that discussions between PSO and PIA on the handover of land took place repeatedly, but no legal conveyance has been executed to date.
The dispute has gained urgency after the government declared a consortium led by the Arif Habib Group as the successful bidder for a 75 percent stake in Pakistan International Airlines. The consortium submitted a top bid of Rs135 billion; however, officials clarified that the effective sale value was Rs10 billion, with the remaining Rs125 billion committed as fresh investment into the airline.
