Govt approves ₨100 billion sovereign guarantees for PSO financing, tightens recovery of ₨60 billion Cnergyico dues

The Economic Coordination Committee (ECC) of the Federal Cabinet approved letters of comfort and sovereign guarantees worth ₨100 billion to enable Pakistan State Oil (PSO) to secure a syndicated running finance facility, while also tightening efforts to recover around ₨60 billion in outstanding petroleum levy and surcharge-related dues from Cnergyico PK Limited.

The meeting, chaired by Finance Minister Muhammad Aurangzeb on Friday, approved the government-backed guarantees to help PSO address liquidity constraints and maintain uninterrupted petroleum supplies across the country.

The ECC was informed that state-owned enterprises, particularly gas sector companies, owe more than ₨904 billion to PSO, creating significant financial pressure on the country's largest oil marketing company and making it increasingly difficult to manage fuel supply requirements under prevailing geopolitical conditions.

To support PSO's liquidity position, the committee approved sovereign guarantees and letters of comfort for a ₨100 billion syndicated running finance facility, under which the company is expected to secure ₨50 billion each from Habib Bank Limited and the Bank of Punjab. The borrowing will remain on PSO's balance sheet.

The committee also reviewed matters relating to Cnergyico PK Limited, including a Deed of Settlement concerning petroleum levy collections that were allegedly recovered from consumers but not deposited into the government treasury.

The ECC was informed that approximately ₨60 billion remains recoverable from the refinery, including ₨47.5 billion in principal amount, along with late payment surcharge liabilities.

Officials told the meeting that Cnergyico is seeking incentives under the government's Refining Policy for the upgradation of existing brownfield refineries.

The committee noted that an earlier panel constituted under the Special Investment Facilitation Council (SIFC) to address the late payment surcharge issue required restructuring due to concerns over a potential conflict of interest arising from the inclusion of Cnergyico's chief executive officer.

Following recommendations from the Law and Justice Division, the ECC approved additional safeguards to protect government revenues. Under the proposed mechanism, Cnergyico would be required to deposit incremental incentives into a joint escrow account maintained with the Oil and Gas Regulatory Authority (Ogra), with withdrawals restricted until outstanding petroleum levy and surcharge obligations are fully settled.

The ECC subsequently approved the formation of a new committee under the chairmanship of the Finance Secretary, comprising representatives from the Law and Justice Division, Petroleum Division and SIFC.

The committee has been tasked with resolving the late payment surcharge issue, strengthening recovery efforts and ensuring settlement of the outstanding dues owed by Cnergyico.