Federal Government agrees to exchange power sectors liabilities worth Rs151 billion

Federal Government agrees to exchange power sectors liabilities worth Rs151 billion

Monday, February 20, 2012: The Federal Government of Pakistan has finalised a loan swap deal with commercial banks of the country, in which the government has agreed to exchange power sectors liabilities worth Rs151 billion.

 The deal will ease some pressure off from the power sector by reducing the amount of circular debt. It will also help the companies to operate at near full capacity thus reducing the energy shortfall in the country.

Imtaz Qazi, the water and power secretary told that banks will receive an interest rate of 13% on these loans. He further said, “The annual fiscal impact of this loan is about Rs18.8 billion, which the power companies will pass
on to consumers.”

Nonetheless, the step taken by government is an encouraging one. This injection of hard cash into the energy sector companies will allow energy sector to pay off their liabilities to each other and reduce the stock of “circular
debt” which the government estimates is currently over Rs300 billion.

The Minister revealed that the demand for energy in Pakistan is increasing by 8 percent on yearly basis, whereas, the country has not added a single grid for almost nine years. Because of this the country is facing severe energy
crisis and the current government is striving hard to final alternative sources.

He said, “The government is dependednt on thermal and rental power plants as no power generation capacity has been added for the last nine years.”

Qazi further divulged that the deal took longer than it should have, as commercial banks were demanding a high interest rate if power companies default.

He said, “This deal had been delayed – causing severe power outages throughout the country due to power plants effectively shutting down – simply because the banks were demanding a 20% interest rate on the loans in case the power
companies fail to make payments.”

However, it seems that banks have won as the government has agreed on the aforementioned interest rate.

Short URL: https://www.newspakistan.pk/?p=13384

Posted by Wajahat Javed on Feb 21 2012. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry