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Summary Government has approved issuance of Privately Placed Term Finance Certificates (PPTFCs) of Rs82bn.
OGDC has subscribed to the above TFC’s to settle its overdue receivables from oil refineries and gas companies.Granular details of the PPTFC are as follows:1. Tenor of seven years with a grace period of three years2. Interest rate of KIBOR 1%, payable semi-annuallyAs of June 30, 2012, OGDC receivables stood at Rs138bn. Out of the same Rs82bn (59%) is likely to be converted into investments after the subscription of these PPTFCs.As per the mapping plan, PHPL will net off Rs70bn owed to Pakistan State Oil (PSO) and the remaining to the gas utilities. PSO will clear a similar amount to the oil refineries. Hence, PSO receivables have declined to Rs168bn from Rs238bn.However, there will not be any actual flow of cash in this transaction, and there would be no significant improvement in the liquidity situation of the energy chain even though stock of receivables will decline.
