ISLAMABAD: The Government of Pakistan (GoP) and a consortium of 18 banks have signed Rs1.225 trillion financing facility agreements which was attended by the Prime Minister, Shehbaz Sharif from New York virtually, a senior government official who attended the ceremony told Business Recorder.
“Power Division and other participants remained in the PM Office for hours as Prime Minister was not available to witness the signing ceremony due to his other pressing engagements,” sources added. International Monetary Fund (IMF) and World Bank have already conveyed their consent in this regard.
The government considered allowing a Debt Service Support (DSS) of Rs325 million per quarter, which would have increased the total facility to Rs1.275 trillion. However, it opted to maintain the current power tariff adjustment of Rs3.23 per unit which is capped at 10 per cent of total revenue of power sector.
Circular debt ‘package’: Govt to sign Rs1.225trn pact with 18 banks today
Chief Executive Officer of CPPA-G, Rihan Akhtar, on behalf of the Ministry of Energy (Power Division), had officially invited stakeholders to the ceremony. The sources said, different Ministries including the Power Minister Sardar Awais Khan Leghari and Advisor to PM Privatisation Muhammad Ali were amongst the key speakers.
Muhammad Ali, sources said, praised by work of Analysis Cell comprising Director General, Nepra, Sajid Akram, Rihan Akhtar CEO CPPA-G, Umair from CPPA-G and other team members along with the army officers.
He had invited the senior representatives of Habib Bank Limited Meezan Bank Limited National Bank of Pakistan, Allied Bank Limited, United Bank Limited, Faysal Bank Limited, Bank AL Habib Limited, MCB Bank Limited, Bank Alfalah Limited, Dubai Islamic Bank Pakistan Limited, The Bank of Punjab, Bank Islami Pakistan Limited, Askari Bank Limited, Habib Metropolitan Bank Limited, Al Baraka Bank (Pakistan) Limited, Bank of Khyber, Islamic- MCB Islamic Bank Limited and Soneri Bank Limited.
Other government’s key personalities invited included Deputy Prime Minister, Federal Ministers of Power, Finance, EAD, Petroleum, Planning, Information and Broadcasting, Information Technology, Advisor to Prime Minister on Privatization, Governor State Bank of Pakistan, National Coordinator Task Force on Power, National Coordinator on SIFC, Chairman Nepra, Secretaries of Power, Finance, Planning, Petroleum, Information & Broadcasting, Country Director World bank, ADB and IMF Mission Head at Islamabad, Additional Secretary I&II Power Division, all members of Task Force on power, Spokesperson Power Division, and Chief Executive Officers of CPPA-G, PHL, NPGCL, LESCO, PESCO, SEPCO, HESCO, QESCO and TESCO.
The package, finalised with 18 banks, is aimed at partially retiring the power sector’s circular debt, which now stands at around Rs 1.7 trillion, reduced from Rs 2.5 trillion. Of the Rs 1.225 trillion, Rs 659 billion will be used to repay loans previously obtained by Power Holding Limited (PHL).
According to power sector analysts, the loan availed by the Pakistani government to clear circular debt should not place an additional burden on consumers, as it is being repaid through the existing Debt Service Surcharge (DSS) on electricity bills. This surcharge, which consumers already pay, is being redirected to banks for loan repayment over the next four to six years, without any increase in the tariff or introduction of new charges.
The deal aims to reduce the high interest costs on existing debt by refinancing it with lower-interest loans from a consortium of 18 domestic banks.
Copyright Business Recorder, 2025