Gov't to disburse Rs 200 Sukuk for reducing circular debt of IPPs

June 03, 2020 (MLN):  Government will pay off the circular debt, facing by Pakistan’s power sector, through Energy Sukuk-II worth Rs 200 billion today in view of the power sector inquiry report.

It is pertinent to mention that this inquiry report of the power sector has already been rejected by Independent Power Producers (IPPs).

The debt instrument, Sukuk II, has been issued by the government to address the liquidity constraints faced by the power sector at less than the KIBOR rate through competitive book binding at Pakistan Stock Exchange.

With regards to the disbursement methodology for the Rs 200 billion raised through energy Sukuk-II, Power division has set a standard for disbursement of the said amount, stipulating that all IPPs will be paid in a transparent and efficient manner.

Under the current distribution method, CPPA-G has maintained a total percentage of billing and payment since July 2017, which will continue to be followed for other disbursements. This allocation will provide a small share to such IPPs to meet the operational requirement where the percentage is higher owing to the disbursement of loans in March’20.

It is worth highlighting that these disbursement criteria will be followed for funds released under Rs 200 billion only.

In a meeting of ECC, held on May 30, 2020, it was decided that the energy purchase price, inclusive of GST, would be paid to ensure maximum generation capacity available during the next three summer months (June, July and August 2020).

Moreover, the capacity payments will be disbursed to meet the debt servicing and taxation requirements for the period from June to end August 2020 and Payments to WAPDA, Nuclear Power Plants.

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