Slowly, PSO’s cash flow position is improving

Pakistan State Oil (PSO), the country’s largest oil marketing company, is crawling out of the liquidity squeeze that has dogged it for years. Management briefings around the company’s annual general meeting point to tangible improvements: foreign-currency borrowings are being pared down, policy changes are reducing the build-up of receivables tied to gas allocations, and a long-awaited government plan to cut the energy sector’s circular debt is finally on the table. While none of these shifts is a silver bullet, together they mark the first sustained easing in the company’s cash flow pressures in years.

The clearest headline is debt. PSO’s foreign loans have fallen from about $1.3 billion to $900 million, with management aiming to trim a further $300 million by year-end. For a balance sheet exposed to dollar swings and import-linked working capital, cutting hard-currency leverage is the fastest way to steady cash flows and reduce finance costs. It is also a confidence signal to banks and suppliers that PSO can fund cargoes without leaning as heavily on expensive external lines.