Finance Minister Muhammad Aurangzeb praised the Rs 120 crore bank loan to ensure that Pakistan’s revolving debt is paid back to the “largest financial and largest restructuring transaction” in the country’s history.
Wednesday, the government sign The loan facility is worth approximately Rs 1.225 and owns 18 banks to address unpaid dues from independent electricity producers (IPPs) parked in debt. These dues will be served by a surcharge of Rs 3.23 per unit to the consumer for a period of six years.
The signing ceremony was a hero of the Prime Minister’s Office, and the Prime Minister of New York actually witnessed it. Although ministers confirmed the signing of the agreement, no official announcement was made. Under the agreement, the government will have 30 days to require banks to pay the bank in a timely manner to avoid fines.
Today, the ceremony was aired on TV, with both the Prime Minister and the Finance Minister addressing the gathering.
In his speech, Oranzeb said the facility “solved structural problems in the power sector.”
“Ultimately, it’s all for the benefit of Pakistan and the benefit of consumers,” he said.
The Finance Minister praised the efforts of the authorities regarding arrangements for loan facilities, “This is a very important step in reducing the energy equation.”
Shehbaz responded to the minister’s idea, calling the facility a “huge success” and noted that “circulating debt is consuming all our resources”.
The Prime Minister pointed out that negotiating with the IPP was a “huge challenge” but the team “fulfilled their responsibilities at the right time”.
He also thanked Chief Marshal Syed Asim Munir for his “behind the scenes”. Prime Minister Shehbaz outlined future steps, explaining that the next targets of the power sector include privatizing distribution companies and handling line losses.
“These are huge challenges that we have to believe in,” he added.
Electricity Minister Awais Leghari said at the ceremony that the move was a “bold step”, noting that “circulating debt has been burdened with the energy sector for a long time.
“The Circular Debt Financing Program is another landmark initiative to restore the health of our power sector,” Leghari added.
Under the facility, the service of debt surcharge (DSS) will be served at a tax rate of Rs 3.23 per unit. Among them, Power Holding Ltd (PHL) (a shell subsidiary of Power Division) will use a loan of Rs 65,900 crore.
The remaining funds – $55.6 billion – will be used to pay dues to IPP, oil sector entities and make subsidy adjustments, including through book adjustments and cash settlements.
The Ministry of Finance Facilitated The Loan Agreements With 18 Banks, Including Habib Bank, Meezan Bank, National Bank of Pakistan, Allied Bank Ltd, United Bank Ltd, Faysal Bank Ltd, Bank Al Habib Ltd, MCB Bank Ltd, Bank Alfalah, Dubai Islamic Bank, Bank of Punjab, Pakistan, Askari Bank Ltd, Habib Metropolitan Bank, Al Baraka Bank Ltd, Khaiber Bank, MCB Islamic Bank and Soneri Bank.
In stocks with little reform and exceeding Rs Revolving debtPakistan’s energy sector continues to have a serious impact on its economy in all sectors, due to weak collection rates, theft, poor infrastructure, governance issues and inefficiency in the market.
According to the Washington Institute of International Finance (IIF), “The GDP value of the energy sector is about 4% of the GDP debt vote. The impact of this debt is refuted throughout the economy, affecting not only fiscal, but all growth, inflation, inflation, inflation and the financial sector.”
It said that revolving debt and energy subsidies put a huge pressure on public finances, leading to ongoing fiscal imbalances and forcing governments to allocate resources away from other investments, social programs and infrastructure projects and squeeze out private SECs.
