Power Division is likely to get rescheduled Rs 136 billion power sector loans obtained from a consortium of commercial banks in early 2012, due to consistent financial constraints, well-informed sources told Business Recorder. The government claims that it has turned around and improved the performance of the country's power sector by slashing losses and reducing the pace of increase of circular debt, but IMF's team which recently visited Islamabad expressed concerns at the level of circular debt.
The IMF's Mission chief recently stated that energy sector's circular debt is a burden on the state and a big source of uncertainty. Presently, the stock of circular debt is around Rs 1.5 trillion, comprising Rs 818 billion parked in the books of Power Holding Private Limited (PHPL), whereas the remaining amount is termed circular debt (as per the definition).
PHPL was incorporated in 2009 under the Companies Ordinance 1984 (Now Companies Act 2017) as wholly owned and controlled by Government of Pakistan. It is a Special Purpose Vehicle (SPV) with one function: to arrange bridge financing for repayment of liabilities of Discos and settle the circular debt of power sector on the terms and conditions approved by the Ministry of Finance with concurrence of ECC. PHPL has the function to park the loans taken for the power sector by performing swap financing arrangements and negotiating financing terms of the loans obtained.
PHPL executes the financing agreements with banks and disburses the entire proceeds through CPPA-G for settlement of Discos liabilities towards power producers. All the financing facilities are secured against unconditional and irrevocable guarantees of the government of Pakistan.
The details of STFFs are as follows: (i) Rs 136.45 billion, tenure 9 years (disbursement date February 21, 2012 and converted to new facility on January 29, 2017); (ii) Term Finance Facility (TFF), Rs 6.07 billion( March 13, 2012, rescheduled on March 21, 2017); (iii) TFF, Rs 15 billion (disbursed on September 8, 2012 and extended in November 2015); (iv) Private Placed Term Finance Facility (PPTFC), Rs 82 billion, disbursed on September 10, 2012; (v) STFF, Rs 30.95 billion, disbursed on May 21, 2014;(vi) STFF, Rs 25 billion disbursed on December 31, 2014( Discos);(vii) STFF, Rs 40 billion, January 30, 2015(PHPL);(viii) STFF, Rs 7.49 billion, disbursed on July 2, 2015( Finance Division);(ix) Islamic STFF, Rs 25 billion, disbursed on April 29, 2016 (PHPL);(x) Islamic conventional) Rs 30 ,disbursed on March 9, 2017( Finance Division);(xi) Islamic Conventional) Rs 41 billion, disbursed on June 22, 2017( Discos);(xii) STFF, Rs 80 billion, disbursed on March 29, 2018(PHPL);(xiii) STFF, Rs 50 billion, disbursed on May 3, 2018(PHPL);( xiv) STFF, Rs 50 billion, disbursed on May 30, 2018; and (xv) Islamic Finance Facility, Rs 200 billion disbursed early 2019.
PHPL availed loan facility of Rs 618.961 billion of which just Rs 35.473 billion was repaid leaving outstanding loans of Rs 583.488 billion along with accrued mark up of Rs 32.75 billion as on June 30, 2018. PHPL has so far made payment of Rs 153.118 billion as mark up on outstanding financing facilities excluding accrued interest.
In PHPL Islamabad, a loan of Rs 82 billion was obtained on March, 2013 @ Kibor +1% on the guarantee of Ministry of Finance on behalf of President of Pakistan. Due to late/non-payment of principal installments alongwith mark up, liquidated damages of Rs 25.804 billion were accrued on the loan facility, which caused loss to the stated extent.
Financial management resulted in loss of Rs 25.804 billion on account of liquidated damages due to non payment of principal installments along with markup to OGDCL up to FY 2017-18 The government is also making efforts to get additional facility of Rs 200 billion from the same consortium of Islamic banks.
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