PD opposes clearing entire debt through dividends’ payout

Ibn-e-Ameer

Petroleum Division has opposed clearing the entire circular debt in oil and gas companies in Pakistan through payment of dividends.

The circular debt in oil and gas companies had touched over the Rs 1.6 trillion mark in Pakistan.

Earlier, Economic Coordination Committee had formed a body to settle the issue of mounting circular debt in the oil and gas sectors.

At present, all oil and gas companies like Pakistan State Oil (PSO), OGDCL, SNGPL, PPL, PLL, and SSGC are trapped in circular debt.

The gigantic circular debt is posing a serious threat to the entire oil and sectors chain.

Sources said that Finance Minister had mulled over a plan of clearing circular debt through payment of dividends by oil and gas companies.

According to him, oil and gas companies should announce dividends for the shareholders.

Circular Debt in Gas Sector Swells to Rs 1.3 Trillion

The government of Pakistan is a major shareholder of the oil and gas companies that will receive handsome cash on account of dividends from these companies.

The government wants to clear the circular debt by proceeds through payment of dividends.

Sources said that the Petroleum division had informed the finance minister that the plan will result in drying up the finances of oil and gas companies.

It had suggested that government should not clear the entire debt through dividends payment.

The petroleum division was of the view that government should clear some portion of the debt through partial payment of dividends.

Issuing PIBs to clear the debt in oil and gas companies

It should clear the remaining portion of the debt by issuing PIBs.

Tarin had chaired several meetings on dividends to shareholders of Energy Sector companies.

Secretary Petroleum had also given a presentation on the issue of dividends by the petroleum-listed companies.

He had informed that a low dividend payout ratio and mounting circular debt resulted in a significant drop in share prices.

Meanwhile, the petroleum division had also informed further that it had affected future growth and petroleum-listed companies’ long-term sustainability.

Now, the petroleum division and finance ministry were discussing a workable plan that could help sustain Petroleum companies.