Islamabad April 17 2025: Pakistan banks signed term sheet with Central Power Purchasing Authority for financing of PKR 1.25 trillion circular debt.
According to people familiar with the agreement between banks and the government-run Central Power Agency told Nukta, which is responsible for purchasing electricity from generation companies, a term sheet has been signed.
As part of the deal, a fresh loan of PKR 617 billion will be disbursed in due course to address the outstanding circular debt.
“The amount to be resolved stands at approximately PKR 1.25 trillion, with PKR 658 billion rolled over under the umbrella of Pakistan Holding Company (PHLC), having been previously settled through the issuance of term finance certificates,” sources said to Nukta.
Additionally, PKR 617 billion will be disbursed under the agreement, with banks receiving a rate of return between 10.5% and 11%, based on the Karachi Interbank Offered Rate (KIBOR) minus 0.90%.
The loan repayment will span six years, with consumers expected to pay PKR 3.23 per unit as debt service charges.
Further details indicate that 18 banks will contribute funds in accordance with financial statements from the year 2024.
Out of the total fresh injection of PKR 617 billion, audited accounts show that approximately PKR 98 billion will come from the National Bank of Pakistan, about PKR 81 billion from Habib Bank, nearly PKR 68 billion from United Bank, and around PKR 58 billion from MCB Bank. The lowest contribution, PKR 4.5 billion, is expected from Al-Baraka Bank.
