The Power Division Wednesday said that it has raised Rs200 billion though Islamic Sukuk at less than Kibor rate (minus Kibor). This was done though competitive book-building at Pakistan Stock Exchange (PSX) though an open and transparent process.

Insiders told Business Recorder that the entire process has been completed by the Power Division after seeking approvals from the Economic Coordination Committee (ECC) of the Cabinet. However, Prime Minister's Advisor on Finance and Revenue, Dr Abdul Hafeez Shaikh, in a tweet on May 19, 2020 took credit for Rs200 billion Sukuk, saying "First time, govt raised Rs 200 billion through Sukuk at less than Kibor rate, through competitive book-building at PSX, saving Rs 18 billion over 10 years on debt servicing. The transaction oversubscribed by 70 percent. Excellent team efforts by the MoF Debt Office, SECP, SBP and PSX."

Later, the Power Division, under tight monitoring with its officials lamenting discrimination at top fora including Cabinet and Prime Minister's Office, decided to issue its statement to the media.

According to an official statement, this loan will substitute more expensive loans of the power sector. The Power Division further stated that compared to the previous loans and Sukuk, this current Sukuk will save about Rs19 billion of debt servicing over 10 years.

The official statement further stated that Federal Minister for Power and Petroleum, Omar Ayub Khan and Secretary Power, Irfan Ali have appreciated the hard work put in by the Power Sector team and also acknowledged the support provided by Finance Division, State Bank of Pakistan, Securities and Exchange Commission of Pakistan and Pakistan Stock Exchange.

The sources said, the representatives of banks who bid for Sukuk-II, met with the "informal" Technical Advisor of Power Division, Zargham Eshaq Khan.

According to sources, the Board of Directors (BoD) of Power Holding Limited (PHL), accepted the bids of Rs 200 billion after which a formal agreement will be signed between the parties. The Chief Executive Officers of Discos are on board as loans will be shown on their books.

The sources said the ECC on January 1, 2020 constituted a committee with Prime Minister Advisor on Institutional Reforms and Austerity, Secretary Finance and Secretary Power.

The mandate of the committee was to look into the issues of servicing of loan and stock handling, in a holistic manner and further directed to submit viable recommendations to the ECC for consideration.

The committee recommended an allocation of Rs 20 billion from Stimulus Package as a stop gap arrangement for payment of interest on the PES-II for a period of six months or amendment in Nepra Act, whichever is earlier.

The government has already agreed with the World Bank and other international financial institutions to convert Rs 800 billions of PHPL loans into public sector loans to be shown in the budget - with Rs 136.5 billion to be made part of Budget 2020-21.