Pakistan has secured Rs565 billion from a landmark Rs1,225 billion financing deal with 18 commercial banks. The fresh liquidity will help reduce circular debt and stabilise the power sector. Authorities now plan to re-engage with seven CPEC coal-based Independent Power Producers (IPPs) to resolve long-standing dues.
From the total financing, Rs660 billion has gone toward clearing debt in the Power Holding Company. The remaining Rs565 billion is reserved for payments to CPEC coal-fired plants and 49 renewable power projects.
The seven Chinese coal plants, established under the 2015 Power Policy, face outstanding dues of Rs320 billion. This includes Rs150 billion in principal and Rs170 billion in late payment interest (LPI). The government aims to secure a full LPI waiver, following the precedent of local IPPs that forgave Rs377 billion in past dues.
Negotiations with renewable energy producers are also in progress. Together, these projects have a generation capacity of about 2,500 MW. If they accept a Rs31 billion LPI waiver, the government will clear Rs49 billion in principal dues. However, officials admit the talks remain complex because many projects involve foreign and multilateral lenders.
Meanwhile, authorities have already cleared dues owed to local IPPs and state-owned plants. Hydropower and nuclear projects remain outside the restructuring because they are already cost-effective. A successful outcome of the current talks would cut liabilities, restore investor confidence, and improve long-term energy sector sustainability.
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