Issuance of domestic Ijara Sukuk likely to be approved by Cabinet

The federal cabinet which is scheduled to meet on Tuesday (today) with Prime Minister Imran Khan in the chair is expected to approve issuance of domestic Ijara Sukuk against 1510 acre unencumbered land of Jinnah International Airport, Karachi.

In this regard, Ministry of Finance has sent a summary to the federal cabinet for the go ahead signal. The exact size of issuance, tenor and rental rate will be determined by the market response received at the time of issuance. Finance Ministry says that in order to support the government's budgetary position and promote the Islamic banking industry in the country, it intends to issue Ijara Sukuk in the domestic capital market.

The asset identified to structure the Ijara Sukuk is the unencumbered land of Jinnah International Airport, Karachi. The asset has been utilized by the Government in the past for Sukuk issuance and is presently available for new issuances.

The transaction will be executed with the support of a consortium of three banks, namely Meezan Bank, Bank Alfalah and Dubai Islamic Bank engaged as financial advisors through an open competitive process following Public Procurement Rules, 2004. The consortium will extend support in preparing the necessary Sukuk documents, structuring the transaction, obtaining Shariah approvals and carrying out fresh valuation of the identified assets.

The Finance Division has no objection to utilising the unencumbered land at Jinnah International Airport, Karachi for domestic Ijara Sukuk issuance. The transaction will be undertaken in coordination with the State Bank of Pakistan (SBP) and all transaction documents will be shared with the Law and Justice Division for clearance from legal point of view before finalization.

According to the federal cabinet agenda, Petroleum Division and Power Division will give detailed presentations on the gas pricing mechanism and power pricing mechanism including the impact of different surcharges, taxes, fuel prices and impact of Gas Infrastructure Development Cess (GIDC). The price of gas will be increased from January 1, 2019, whereas quarterly adjustment of electricity prices are also expected next month, in addition to monthly fuel price adjustment, which is a regular feature of electricity tariff fixation mechanism agreed with the International Monetary Fund (IMF) and other financial institutions.

The Ministry of Finance, Ministry of Industries and Production, Ministry of National Food Security and Research and Chairperson Competition Commission of Pakistan will give presentations on the findings of the CCP report regarding manipulation of flour and sugar price by cartels.

The cabinet is also expected to discuss political situation of the country including prospects of removal of Maryam Nawaz's name from the Exit Control List (ECL) as Lahore High Court (LHC) has given seven days to the government to take a decision on this issue.

Other items of cabinet agenda are as follows: (i) constitution of Islamabad Capital Territory Local Government Commission, Islamabad; (ii) appointment of judge, Special Appellate Court under Section 46(1) of the Prevention of Smuggling Act, 1977 in Balochistan; (iii) permission for execution of development projects involving construction work by Ministry of National Health Services, Regulations and Coordination and its entities; (iv) appointments/ changes on the Board of Governors Pakistani Foundation (OPF); and (v) reconstitution of governing body of workers welfare fund.

The cabinet is expected to discuss progress on issues related to appointment of Chief Election Commissioner.