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Business Recorder
a day ago
- Business
- Business Recorder
Industrial, agricultural consumers: Govt working on ‘surplus power package' proposal: minister
ISLAMABAD: Federal Minister for Energy (Power Division) Sardar Awais Ahmad Khan Leghari said the government is working on a proposal for a 'Surplus Power Package' for industrial and agricultural consumers, in line with the 'Bijli Sahulat Package' for the next three years. Speaking during the question hour in the National Assembly on Monday, the minister said the proposed package would be available to all industries, including the export sector, based on incremental power consumption. He said the Energy Ministry is developing a plan to offer discounted electricity rates on additional usage. Greenfield industries—such as data centers and crypto-mining operations—may receive these discounted rates on their entire consumption, subject to certain conditions. Responding to a supplementary question, Leghari said the government is also working on a direct subsidy scheme to end cross-subsidies, which place a burden on domestic consumers. In a written reply, the minister informed the house that as of May 2025, the circular debt in the power sector stood at Rs2.47 trillion. He said the main causes of debt accumulation were inefficiencies in distribution companies (DISCOs), high technical losses, and revenue recovery shortfalls compared to targets set by National Electric Power Regulatory Authority (NEPRA). He said that other sources of debt increase include unbudgeted subsidies and financial cost (delayed payment charges) of payables to the power producers. He said that in order to reduce debt stock, an amount of Rs1.275 trillion is being arranged to finance/refinance the current stock of circular debt. He said that the loan will have a six-year tenure at an interest rate of 3-month KIBOR minus 0.9 per cent and will be repaid through the Debt Service Surcharge already collected from electricity consumers in their monthly bills as the Financial Cost Surcharge (FCS). To prevent fresh accumulation of debt, the minister said multiple measures are underway, including tariff renegotiations with independent power producers (IPPs), privatization of four DISCOs, reducing technical losses through efficiency improvements, market liberalisation, and ensuring future capacity additions are made on a least-cost basis. Responding to a calling-attention notice, Minister for Parliamentary Affairs Dr. Tariq Fazal Chaudhry said the National Disaster Management Authority, in coordination with provincial authorities, regularly runs public awareness campaigns and issues timely updates, forecasts, and precautionary measures on weather conditions, rainfall, floods, and other natural disasters. Later, the National Assembly unanimously passed a resolution urging the federal and provincial governments to take necessary steps to celebrate the 1,500th Eid Milad-un-Nabi (SAW) in a befitting manner. The resolution, moved by Pir Syed Fazal Ali Shah Jillani, called for organising Milad programmes at the highest level and illuminating both government and private buildings. It emphasised the importance of promoting the teachings of the holy Prophet Hazrat Muhammad Sallallaho Alaihe WaAlayhee Wassallam, Khatim-un-Nabiyeen. In connection with National Minorities Day, the House also passed another resolution moved by Naveed Aamir Jeeva. The resolution is calling for the inclusion of Quaid-e-Azam Muhammad Ali Jinnah's historic address, delivered on 11 August 1947 to the first Constituent Assembly of Pakistan, into the national curriculum. In that address, the founder of Pakistan declared that 'you are free to go to your temples, mosques, or any other places of worship in this country. You may belong to any religion, caste, or creed that has nothing to do with the business of the State.' Copyright Business Recorder, 2025
Business Recorder
05-08-2025
- Business
- Business Recorder
Circular debt: banks to the rescue
Another year, another circular debt headline. But this time, something different has happened. For the first time in years, Pakistan's power sector has seen a significant resolution of circular debt stock, even if the flow remains a looming threat. Recent Power Division data shows circular debt at Rs 2.396 trillion as of March 2025, a marginal increase since July last year, and Rs 398 billion lower than March 2024. This is no small feat for a system accustomed to perpetual bleeding. Credit where it is due: the government has taken tough steps to control leakages, enforce cash flow discipline, and ring-fence funds to repay sector debt. The Finance Ministry's decision to redirect the Rs 3.23/kWh Debt Service Surcharge (DSS) solely towards debt reduction, rather than letting it disappear into the general pool, reflects fiscal prudence. Zafar Masud, Chairman of the Pakistan Banks Association (PBA), recently highlighted that this time, reforms go beyond temporary bailouts. There is an emerging focus on plugging systemic leakages, enforcing timely payments across the supply chain, and rethinking subsidy structures to reach the vulnerable without distorting the entire revenue cycle. Enhanced governance in DISCOs and technology-led oversight using digital monitoring tools are being rolled out to reduce theft and line losses, chronic ailments that have plagued the sector for decades. However, let's be clear: this is not the end, only a breather. NEPRA warns that average utilization of our 45,888 MW installed capacity remains just 34 percent, and even peak utilization is a mere 56 percent. Consumers continue to pay for idle capacity while distribution companies remain plagued by infrastructure decay, theft, inflated billing, and dismal recoveries. Without addressing these legacy issues, including both infrastructure upgrades and efficient collections, we will soon find ourselves back at square one. What makes this circular debt resolution truly historic is its scale and execution. It involved Rs 683 billion as the largest-ever restructuring of government debt sitting on bank balance sheets, combined with Rs 612 billion as the largest fresh syndicated financing ever raised independently. Collectively, this has become the largest banking transaction in Pakistan's history, by leaps and bounds, nearly 4.5 times bigger than the previous largest transaction. This was not only the largest, but perhaps the quickest execution ever of such a complex, multi-stakeholder financial transaction. The banking industry stepped up, taking a larger view of economic revival, knowing that healthier power sector cash flows will reduce financial risks and unlock growth opportunities for banks themselves. Banks agreed to a 150-basis-point reduction in their rate, bringing the new facility to KIBOR minus 90 bps. If rates fall, repayments will accelerate, potentially clearing this debt within four to six years. This frees up bank balance sheets, releases sovereign guarantee headroom for priority sector financing, and revives liquidity within the power sector itself. Power companies now have the room to invest in upgrades, efficiency, and financial discipline, while banks can redeploy freed capital into productive lending for SMEs, agriculture, green energy, and industrial revival. This is the kind of systemic fix that supports economic growth directly and indirectly. To bring all partners together, the PBA played a central and strategic role, building consensus, aligning stakeholder interests, and ensuring this was not just a transaction but a transformative milestone. The government's role has also been critical in enforcing discipline, but it is the collaborative spirit between the government, banks, and regulators that has created this breather. For the first time in years, there is visible alignment to move from crisis management to long-term planning. But let us be clear-eyed: the real battle is far from over. While the stock has been resolved at this point in time, the flow must stop and remain stopped going into the future. If we lose momentum, if governance reforms stall, if privatization of DISCOs remains shelved, if distribution efficiency improvements and collections falter, we will end up back where we started. Circular debt is not a disease in itself; it is a symptom of a broken system. Today, we have bought time. This is a positive step in a journey that must continue with unrelenting focus. The power sector crisis was not created overnight, nor will it be resolved overnight. But for the first time in a long while, there is a sense of shared responsibility, decisive action, and cautious hope. Let us not lose the momentum. The real work has just commenced. (The writer is advisor — Pakistan Banks Association) Copyright Business Recorder, 2025
Business Recorder
25-07-2025
- Business
- Business Recorder
Pakistan's bonds hit 3-year high after credit rating upgrade
LONDON: Pakistan's long-dated dollar bonds rallied for a second day to hit fresh three-year highs on Friday, a day after S&P Global upgraded the country's sovereign credit rating. The rating firm's one notch increase to 'B-' cited the International Monetary Fund's support in stabilising Pakistan's strained finances. KIBOR declines across short-term tenors amid policy rate cut expectations The 2031 and 2036 maturities both gained around 1.6 cents on Friday to bid at 93.85 cents and 87 cents respectively, lifting them to their highest levels since early 2022.
Business Recorder
24-07-2025
- Business
- Business Recorder
Monetary policy poll: 50-100bps cut expected
KARACHI: As per the market expectations, the State Bank of Pakistan (SBP) is likely to cut the key policy rate in its Monetary Policy Committee (MPC) meeting to be held on July 30, 2025. In a poll conducted by Topline Securities, 56 percent of the market participants expect a 50-100bps cut in upcoming monetary policy meeting compared to 44 percent in last poll. While 37 percent are expecting no change compared to 56 percent in last MPS. In last MPC meeting, majority was not sure about the rate cut as federal budget announcement was ahead and Iran Israel conflict was leading the surge in oil prices. In line with these concerns, state bank also maintained status quo and kept the rate unchanged at 11 percent. In Topline view, the SBP has further room of around 100bps cut as FY26 inflation is expected to be average between 5-7 percent, translating into real rate of 400-600bps (Policy Rate: 11 percent), higher than historical real rate of 200-300bps. Analysts believed, the left-over room is quite notional and will be gradual. 'We expect central bank to announce cut of 50bps in upcoming MPC meeting,' they said. FY26 inflation is expected to average 5-7 percent with July inflation expected in the vrange of 3-3.5 percent. The inflation is expected to remain in range of 3-5 percent till Jan 2026 and in range of 6-8 percent from Feb 2026 to Jun suggests real rate of 400-600bps based on average FY26 inflation of 5-7 percent. The secondary market yields have come down by 10-39bps on KIBOR and T-bills. The 6M KIBOR is currently at 10.99 percent while T-bill is at 10.75 percent. On question related to interest rate target for Dec 2025, 51 percent believed that policy rate will come down to 10 percent by Dec 2025, while 32 percent believe it will be 9 percent by Dec 2025. In line with market participants, Topline also expect interest rate falling to and bottom out at 10 percent by Dec 2025. On currency side, 51 percent participants are expecting currency in range of Rs285-290 by Dec 2025 and while 15 percent each believes that exchange rate will remain in range of 290-295, 295-300, and over 300, respectively. Meanwhile, in T-Bill auction held on Wednesday, participation of Rs1,058 billion was seen with government raising Rs409 billion against a target of Rs200 billion and maturity of Rs361 billion. Yields decreased by 10-39bps, with the current yields standing at 10.85 percent for the 1-month T-Bill, 10.71 percent for the 3-month T-Bill, 10.71 percent for the 6-month T-Bill, and 10.70 percent for the 12-month T-Bill. Copyright Business Recorder, 2025
Business Recorder
21-07-2025
- Automotive
- Business Recorder
Nishat Power to invest Rs2.5bn in EV venture NexGen Auto
Nishat Power Limited (NPL) has announced plans to invest up to Rs2.5 billion in NexGen Auto (Private) Limited, a related company concentrated on electric vehicles (EVs). NPL disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Monday. The listed company has called for an Extraordinary General Meeting (EGM) in this regard, which is scheduled to be held on August 13, 2025. The proposed investment, to be approved through special resolutions by NPL shareholders, includes Rs2 billion in equity investment by way of acquisition/subscription of 200 million ordinary shares of Rs10 each of NexGen Auto (Private) Limited, and an additional Rs500 million as a one-year working capital loan. HUBCO plans to install EV charging network across Pakistan As per the document, the loan component will carry a return of 3-month KIBOR plus 100 basis points, or the company's average borrowing cost—whichever is higher—payable quarterly. NexGen Auto, incorporated in August 2024, has made significant strides toward its market debut. The company has formalised its partnership with Cherry Automobile Co. Ltd of China, for the importation, local production and nationwide distribution of its two sub-brands Omoda and Jaecoo, specialised in new energy vehicles. 'NexGen sales and marketing teams are actively engaged in pre-launch campaigns, culminating in a much-anticipated mega launch event slated for the first week of August 2025,' NPL informed. According to documents made available to the stock exchange, NexGen's project for CKD assembly has already commenced and is expected to be completed by March 31, 2026, with commercial operations set to begin within calendar year 2025. The total project cost is estimated at Rs14.7 billion, to be funded through a mix of debt and equity. NPL expects that the investment will not only yield dividend income and capital gains in the long run but also diversify its portfolio and strengthen its commitment to sustainability-focused ventures.
