CPPA-G in financial distress
Mushtaq Ghumman/Business Recorder/11-02-2020
ISLAMABAD: The continuous buildup of energy sector circular debt has reportedly dismayed the Central Power Purchasing Agency-Guaranteed (CPPA-G) prompting it to contend that it does not have sufficient funds to pay 7th installment of mark-up on Rs 50 billion Syndicated Term Finance Facility (STFF) for Power Holding Private Limited (PHPL), well-informed sources in CPPA-G told Business Recorder. According to Leader of the House in Senate, Senator Shibli Faraz, the stock of circular debt has reached a shocking level of Rs 1.9 trillion of which Rs 1.1 trillion is circular debt, as defined, and Rs 804 billion is parked in PHPL’s accounts. PHPL was incorporated in 2009 under the Companies Ordinance 1984 (Now Companies Act 2017) as wholly owned and controlled byGovernment 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.