KARACHI: Government has approved payment of Rs 82 billion ($233.17 million) to Oil and Gas Development Company Limited (OGDC) as part of circular debt settlement plan.

Development was shared by OGDC in notice to Pakistan Stock Exchange (PSX). "We are pleased to inform that, as part of circular debt settlement plan government has approved payment of Rs 82 billion to OGDC, representing principal amount of company's investment in Privately Placed Term Finance Certificates (PPTFC) issued by Power Holding (Private) Limited (PHL)," read statement. Further, government has also approved repayment of interest of Rs 92 billion in twelve equal installments commencing from July 2025, read notice.OGDC shared that as part of settlement, company has agreed to waive off Rs 72 billion on account of liquidated damages on directives of government. OGDC had subscribed to these certificates for settling its overdue receivables from oil refineries and gas companies.

Topline Securities, brokerage house, in note said that clearance of TFCs would further improve cash flow position of OGDC. "We believe, either these funds will be used for announcing dividends or will be diverted for exploration activities or for purpose of clearing any other pending payables," it added. Managing Director/CEO Ahmed Hayat Lak, in letter to Secretary Power Division, referred to long outstanding overdue TFCs of Rs 82 billion issued by PHL to OGDC in year 2012 under government backed partial settlement of circular debt.