ISLAMABAD: Petroleum Division has sought ECC nod to convert Term Finance Certificates (TFCs) of Rs 202.8 billion of Oil and Gas Development Company Limited (OGDCL) owed by Power Holding Private Limited (PHPL) into Pakistan Investment Bonds (PIBs), sources close to Secretary Petroleum told Business Recorder.
Sharing the details, they said Government of Pakistan in September, 2012 approved the issuance of Term Finance Certificates amounting to Rs 82 billion by the Power Holding Private Limited (PHPL) for the partial settlement of circular debt. These TFCs were subscribed by OGDCL in order to settle its overdue receivables.
The terms of the TFC Investor Agreement (TFCIA) between OGDCL and PHPL were issued for a period of seven years including a grace period of three years, carrying an interest rate of Kibor+1 per cent semi-annually.
The principal portion of these TFCs was payable in eight equal instalments, commencing from March 2016. Liquidated damages at 20 per cent per annum are also payable on delayed payment of either or both the principal and mark-up.
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The National Bank of Pakistan (NBP) executed the transaction on 3rd September 2012 as a Trustee. TFCs are secured by sovereign guarantee of GoP, covering the principal, mark-up and any other amount becoming due for payment in respect of investment in TFCs.
In 2017, PHPL through Ministry of Energy (Power Division) submitted a proposal to the Economic Coordination Committee (ECC) of the Cabinet for extension in the tenure of TFCs of Rs 82 billion from seven years to ten years including extension in grace period from three years to six years. The ECC considered and approved the proposal of Power Division.
As of April 30, 20222, PHPL has only paid five instalments of mark-up amounting to Rs 19.392 billion while defaulting on all the following mark-up and principal instalments. The outstanding amount from PHPL in respect of TFCs as on April 30, 2022 was Rs 202.8 billion; of this the amount of mark- up was Rs 55.577 billion, LDs Rs 65.223 billion and principal repayments Rs 82 billion.
According to Petroleum Division, OGDCL is currently facing a severe liquidity crunch and finding it difficult to honour its corporate, regulatory and operational commitments with an overall receivable in excess of Rs 800 billion.
Copyright Business Recorder, 2022
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