KARACHI: Pakistan’s government is expected to secure deals today, Wednesday, to raise about Rs1.3 trillion ($4.6 billion) in Islamic financing from banks, market experts said a day earlier, to retire energy sector debt and meet conditions of the International Monetary Fund’s (IMF) $7 billion loan program.
The funds will be raised through Sukuk or Islamic bonds and a “financing facility agreement” will be signed at the Prime Minister’s House “for circular debt reduction of the power sector,” according to a ceremony invitation sent out by the state-run Central Power Purchasing Agency (CPPA) earlier today.
The agency is Pakistan’s state-run power market operator which buys electricity from power producers in bulk and sells it to distribution companies, handling payments, contracts and billing for the national grid.
Its invitation did not name the participating banks or specify the exact financing target, but energy analysts following the development said the government plans to secure as much as Rs1.3 trillion from 18 banks.
“The government is expected to raise about Rs1.3 trillion in Islamic financing from almost all the banks to settle its debt,” said Adnan Sami Sheikh, assistant vice president of research at Pakistan Kuwait Investment Company, a joint venture between the governments of Pakistan and Kuwait.
