The government has collected Rs 36.637 billion from electricity consumers to service power sector loans (syndicated term finance facility) estimated at Rs 136.454 billion. Sources said that Central Power Purchasing Agency (CPPA) has released nine instalments on account of mark-up aggregating Rs 36.637 billion through Power Holding (Private) Limited to the syndicate banks from cash flows of the power sector since the date of execution of the facility on February 21, 2012.
They further added that payments on account of mark-up and principal in respect of subject facility are made from collections received by distribution companies from electricity consumers. The grace period of two years of the facility has been completed and the payment of quarterly instalments on account of principal portion amounting to Rs 11.371 billion per quarter is due from May 21, 2014; and thereafter every quarter, which is expected to adversely affect the liquidity of the power sector.
A proposal was submitted to the Economic Co-ordination Committee (ECC) of the Cabinet for an extension in the grace period of syndicated term finance facility, on the premise that the syndicate banks have agreed to extend the grace period under the facility from two years to four years and consequently the tenor of the facility would stand extended up to seven years, while other terms and conditions remain the same. Pursuant to the proposed arrangement, principal instalments would be deferred till May 21, 2016. The proposal was accorded approval by the ECC chaired by Finance Minister Ishaq Dar.
The proposal on issuance of a sovereign guarantee by the Finance Division with respect to arrangements of terms finance facility through power holding company to solve the cash flow problems of Discos was originally approved by the ECC on January 19, 2012. The meeting was told that Discos were facing financial problems in repayment of long outstanding power purchased dues to CPPA mainly due to high distribution losses, low revenue collection and lower applicable tariff. An increase in thermal generation through furnace oil also added to the cost of generation which was not being recovered through tariff. All these factors have already affected the cash flow of Discos, limiting their ability to settle their power purchase liability towards CPPA. As a result, the CPPA was unable to pay the power purchase cost to IPPs and Gencos which led to a reduction in power generation/increase in load shedding.
The government had taken various measures to resolve the issue, including facilitating Discos to arrange financing facilities through Power Holding (Private) Limited to improve their cash flows. The financing arrangements for distribution companies helped Discos to discharge their financial obligations towards CPPA which ultimately helped Gencos /IPPs to discharge their liabilities towards fuel suppliers.
The financing arrangements for distribution companies, syndicated term finance facility, of Rs 136.454 billion was executed through Power Holding (Private) Limited on February 20, 2012 on terms and conditions approved by the Finance Division. The major terms and conditions include disbursement on 21st February, 2012 with a tenor of up to five years, inclusive of a grace period of 24 months from the first disbursement date with a grace period applicable to the principal repayments only. The price of facility was three month KIBOR (base rate) + 2.00 p.a. (spread); however, 1% rebate/reduction in spread, is given, in case: ( i) assignment of receivables from Discos to PHPL and onward to the syndicate banks is completed and perfected (Deed of Assignment); (ii) collection Mechanism (Collection Accounts Agreement) is fully implemented to the satisfaction of syndicate banks and the same being complied with from time to time by the Discos and PHPL; and (iii) instalment payments are made within 15 days of the due date.
Comments
Comments are closed.