OGDC Gets Rs7.7bn TFC Interest, Loss Reversal by FY26
Staff Report
Islamabad: Oil and Gas Development Company (OGDC) received the first interest payment of Rs7.7 billion from Power Holding Private Limited (PHPL) against Term Finance Certificates (TFCs) issued as part of the 2013 circular debt settlement. The total outstanding interest of Rs92 billion is scheduled to be paid in 12 monthly instalments starting from July 2025.
In 2013, the Government of Pakistan issued PIBs and TFCs amounting to Rs50.7 billion and Rs82 billion, respectively, as part of a partial settlement plan for the power sector’s circular debt. Under the original agreement between the company and PHPL, the TFCs were to mature over 7 years, including a 3-year grace period. However, in 2017, PHPL requested an extension to a 10-year term with a 6-year grace period.OGDCL Makes Oil Discovery in Sindh
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The principal amount of Rs82 billion was finally settled and credited to OGDC on June 27, 2024, while the accrued interest of Rs92 billion was scheduled to be paid in 12 equal monthly instalments starting July 2025.
As part of this schedule, the first instalment of Rs7.7 billion was announced today, leaving a remaining balance of Rs84.3 billion by our estimates.
The company has already recognized the interest income component in its balance sheet and profit and loss statement over the life of the instrument. This is reflected in the carrying value of TFCs, which stood at Rs170 billion as of March 2024—comprising Rs82 billion in principal and the remainder representing accrued markup.
Following the settlement with PHPL on June 27, 2024, the company received the principal amount, leaving a balance of Rs92 billion on its books. Of this, Rs70 billion was recorded as a receivable, while a loss of Rs23 billion was recognized in accordance with accounting principles related to the discounting of future payments.
By March 2025, Rs10.6 billion out of the Rs23 billion had been reversed. The remaining loss is expected to be fully reversed in FY26, potentially resulting in other income of Rs9.5 billion (after tax: Rs6 billion or Rs1.4 per share) during the year.
This cash inflow may enhance the company’s payout capacity and support financing for upcoming projects, including Reko Diq, the Abu Dhabi Block, and the anticipated offshore bidding round.
We reiterate our BUY stance on OGDC, with the stock trading at an FY26 P/E of 5.7x.,” Topline said.
