ISLAMABAD: Pakistan has successfully completed an Islamic financing transaction worth Rs930 billion aimed at reducing circular debt in the power sector and improving financial stability. Officials of the Central Power Purchasing Agency-Guarantee Limited (CPPA-G) disclosed the development during a public hearing on electricity tariffs.
According to the officials, the transaction supported the government in facilitating approximately Rs795 billion in subsidies. Electricity consumers also received relief exceeding Rs183.4 billion through various financial measures and tariff adjustments.
Rs184.53 Billion in Savings Through Negotiated Settlements
CPPA-G reported that revised settlement agreements, negotiated with relevant power-sector stakeholders and implemented under the supervision of a task force, generated savings of Rs184.53 billion.
The agency said these savings benefited electricity consumers through tariff adjustments. It also conducted strategic negotiations with wind, solar and nuclear power producers to rationalise electricity tariffs and reduce costs.
The negotiations included tariff reductions and concessions related to late payment surcharges, helping ease certain financial pressures within the power sector.
Government’s Efforts to Control Circular Debt
Circular debt remains a major financial challenge for Pakistan’s electricity sector. It develops when payments between power-sector entities are delayed, causing unpaid obligations to accumulate throughout the system.
The Rs930 billion financing transaction forms part of broader efforts to restructure financial obligations, facilitate payments and support the government’s circular debt reduction objectives.
The subsidy-related support of approximately Rs795 billion is intended to help the government meet its financial commitments, while the reported consumer relief reflects savings and tariff-related adjustments. However, the figures do not mean that every electricity consumer will immediately receive the same reduction in their monthly bill.
CPPA-G Seeks Approval for a Multi-Year Tariff Plan
During the hearing, CPPA-G also requested permission from the National Electric Power Regulatory Authority (NEPRA) to submit a multi-year tariff petition from the financial year 2027-28.
The agency’s board has directed management to conduct a comprehensive review based on realistic assumptions, operational requirements and future capital expenditure needs. The objective is to prepare a tariff proposal that accurately reflects the agency’s financial requirements and long-term sustainability.
In recognition of its contribution to the financing initiative, the government also conferred the Sitara-e-Imtiaz on CPPA-G’s chief executive officer and another official.
