Ministry of Finance agrees to convert over Rs800bn PHPL debt into public debt

Business Recorder/14-05-2020

ISLAMABAD: Ministry of Finance has reportedly agreed to convert PHPL debt of over Rs 800 billion into public debt with bi-annual review of power sector performance as per an agreement with the World Bank, well-informed sources in Finance Division told Business Recorder. The ECC recently approved a proposal of Power Division for conversion of Rs 136.5 billion PHPL loan into public debt. The plan envisages Finance Division converting PHPL’s existing GoP guaranteed borrowings as public debt over the period from FY 2019 to FY 2023 or over the extended period. In this connection, maximum amount of PHPL’s debts to be converted into public debt shall be fixed at Rs800 billion and Finance Division will make payments to lenders to the extent of principal amount as and when due through cash or instruments and PHPL shall continue to pay the interest recovered through tariff and any shortfall will be met through further debt surcharge by way of amendment in the Nepra Act or efficiency gains. As per the plan, the circular debt flow will remain around Rs 75 billion per annum over the plan’s period. However, the plan does not address the currently payable amount of circular debt of over Rs 1.1 trillion.