Karachi October 4 2024: Pakistan Petroleum Limited (PPL) reported receiving more cash than it invoiced to customers during the final quarter of FY 2024, according to the company’s financial statements.
The company’s trade debts decreased to PKR 577 billion from PKR 582 billion in March 2024, marking the first decline in trade receivables in 14 quarters.
During the full FY 2024, PPL made significant strides in customer collections, achieving a collection ratio of 81%, up from 53% in the previous year. This progress is evidenced by the recovery of PKR 276 billion this year, compared to PKR 182 billion last year.
This success is largely attributed to three key consumer gas price revisions implemented in January 2023, November 2023, and February 2024. These revisions helped slow the build-up of circular debt and improved the company’s financial standing. Consequently, trade receivables grew at a rate of PKR 5.4 billion per month, a marked improvement from the previous year’s rate of PKR 12.3 billion per month.
Looking forward, with the IMF monitoring circular debt in the gas sector and the PKR/USD exchange rate remaining stable, strong collection performance is expected to continue. Maintaining a solid liquidity position will be essential for supporting oil and gas exploration activities and meeting financial obligations. However, statutory payments still account for more than 50% of collections, underscoring the need for regular gas price adjustments to prevent further circular debt accumulation.
Resolving the previously accumulated circular debt will also be crucial to enabling exploration and production companies to reinvest in sector development, diversify the energy value chain, and enhance shareholder returns.
