KARACHI: Pakistan State Oil Managing Director Syed Muhammad Taha has said that empowering the board of management with regulatory powers is critical to ensuring the company’s sustainability and enabling it to compete effectively in an increasingly challenging market.

During a meeting of the Senate Standing Committee on Petroleum held at the PSO headquarters on Thursday to review the challenges facing the energy sector, Mr Taha explained that 14pc of PSO’s circular debt is equivalent to its EBITDA [earnings before interest, taxes, depreciation, and amortisation] for FY23, highlighting the severity of the issue.

He further detailed challenges such as trapped equity, price competition, investment stagnation, discount dumping, and franchise exploitation. While discussing regulatory challenges, he demanded complete commercial autonomy by empowering the board. “PSO has been the largest buyer of furnace oil for power plants and is currently the largest buyer of LNG in the country for onward sale to SNGPL,” he noted. “This strategic role, however, has created an enormous circular debt burden, eroding profits and restricting growth,” Mr Taha said.

Sui Southern Gas Company Ltd Acting Managing Director Muhammad Amin Rajput while providing an update on the company’s curtailment of gas supply for captive power generation from January and its impact on the industrial sector, informed the Senate committee that the company is closely monitoring the situation to mitigate the adverse effects of gas supply curtailment on industries. He added collaborative efforts with stakeholders are essential to address this challenge effectively.

Senator Quratul Ain Marri said “we must ensure that our policies are not only sustainable but also enable public sector entities to thrive in a competitive environment.”

Committee Chairman Senator Umar Farooq, while stressing the importance of collaboration between public sector entities and the government, said, “The challenges faced by PSO, SSGC, and Pakistan Petroleum Ltd require immediate attention. This committee stands united in its commitment to finding sustainable solutions for the energy sector.”

Published in Dawn, January 24th, 2025