PSO faces Rs30 billion financial challenge as PIA fails to settle receivables

Pakistan State Oil (PSO) is facing a financial challenge as approximately Rs30 billion in receivables from Pakistan International Airlines (PIA) remain unpaid. The state-run oil company had hoped to settle these dues through the transfer of PIA's Islamabad real estate, but the transaction has not been completed despite the privatisation of the airline.

The Express Tribune reported that PIA's privatisation deal, which saw a consortium led by the Arif Habib Group winning the bid with an offer of Rs135 billion, has left PSO waiting for the transfer of land valued at around Rs15 billion. The sale agreement, however, stipulated that the buyer would have to invest an additional Rs125 billion into the airline.

PSO had requested the government to transfer the real estate asset to settle its outstanding dues for jet fuel supplied to PIA. Despite multiple discussions and the completion of the privatisation process, the land has not been handed over.

A PSO spokesperson confirmed that the company continues to claim the full amount owed and will maintain this claim until the legal transfer of the agreed-upon assets is finalised. The total outstanding receivables now stand at Rs30.15 billion, including both the principal amount and late payment charges.

PSO management has written to the Privatisation Commission, urging the transfer of PIA’s real estate in Islamabad, in line with an earlier agreement. The company highlighted that the accounts were reconciled in March 2024, with PIA’s total outstanding payables calculated at Rs23.8 billion as of September 30, 2023.

Following a cabinet decision in February 2024, PSO issued a consent letter agreeing to the transfer of the Islamabad property, subject to federal government approval. However, the land has not been transferred, and PSO has urged the Privatisation Commission to resolve the issue.

Industry officials warn that if the matter remains unresolved, PSO could be the first entity to face consequences from the privatisation of PIA.