The Pakistan Credit Rating Agency maintains Entity Ratings of Pakistan State Oil Company Limited

Lahore: The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Pakistan State Oil Company Limited (PSO) at “AA+” (Double A plus) and “A1+” (A one plus), respectively. These ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The ratings reflect the strong ownership structure of the company, with controlling interest vested in the Government of Pakistan, and high propensity of state support in distressed situations, considering the strategic nature of the company.

With its leading status in the OMC sector, PSO retains pivotal position in the energy supply chain of the country, supplemented by an extensive distribution network, largest storage capacity, and adequate support structure. Meanwhile, ratings take cognizance of increasing short term leverage emanating from persisting circular debt issue in the energy sector, which has also increased PSO’s reliance on imports against local procurement. Nevertheless, comfort may be taken from PSO’s stable cash flows and GoP’s demonstrated commitment to keep the company afloat.

Strengthening of the corporate governance profile of the company and timely resolution of the circular debt issue are critical for the ratings. Meanwhile, any adverse regulatory changes and decline in the perceived level of GoP support would impact the ratings negatively. Furthermore, financial management, in the wake of increasing dependence on L/C based procurement, warranting timely repayment would remain critical for the rating.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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