Ministry of Energy issues Rs200bn 'Pakistan Energy Sukuk'

Published March 2, 2019
In an attempt to resolve Pakistan's circular debt, the Ministry of Energy on Friday issued a Rs 200 billion 'Pakistan Energy Sukuk', which according to a statement shared by Meezan Bank Limited (MBL) CEO Irfan Siddiqui, is the first of its' kind. — Reuters/File
In an attempt to resolve Pakistan's circular debt, the Ministry of Energy on Friday issued a Rs 200 billion 'Pakistan Energy Sukuk', which according to a statement shared by Meezan Bank Limited (MBL) CEO Irfan Siddiqui, is the first of its' kind. — Reuters/File

In an attempt to resolve Pakistan's circular debt, the Ministry of Energy on Friday issued a Rs200 billion 'Pakistan Energy Sukuk', which, according to a statement shared by Meezan Bank Limited (MBL), is "the first of its kind".

As per the statement, the sukuk was issued through Power Holding Private Limited, a company entirely owned by the government, and is a Shariah-compliant instrument.

A meeting of the Economic Coordination Com­mittee (ECC) on January 29 had formally allowed the power division of the energy ministry to proceed with raising Rs200bn Syndicated Islamic Term Finance Facility from Islamic banks against already approved term sheets for cash settlement of the circular debt, including Rs47bn to provincial governments on account of net hydel profit.

The funds to be raised through Islamic banks would be used to ease out the liquidity crunch engulfing the entire energy sector, including oil and gas suppliers, distribution companies, the Water and Power Development Authority and power producers.

According to the Meezan Bank statement, a consortium of Islamic banks led by MBL helped structure the sukuk. Additionally, MBL is acting as the investment agent and trustee of the bond.

The financing has been declared a statutory liquidity ratio (SLR) eligible product by the State Bank of Pakistan (SBP) for all banks in the country. The sukuk is asset-based and comprises of the assets of power distribution companies.

It is based on the Ijarah or Islamic leasing structure and has a 10-year maturity with semi-annual rental payment.

The bond will be listed in the Pakistan Stock Exchange and, according to the statement, a large category of investors will be eligible to invest in it.

"The sukuk will provide much-needed liquidity to the energy sector and help the government to resolve the circular debt crisis," the statement read.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....
Disregarding CCI
Updated 04 Nov, 2024

Disregarding CCI

The failure to regularly convene CCI meetings means that the process of democratic decision-making is falling apart.
Defeating TB
04 Nov, 2024

Defeating TB

CONSIDERING the fact that Pakistan has the fifth highest burden of tuberculosis in the world as per the World Health...
Ceasefire charade
Updated 04 Nov, 2024

Ceasefire charade

The US talks of peace, while simultaneously arming and funding their Israeli allies, are doomed to fail, and are little more than a charade.