- Committee directs Ministry of Energy to proceed with the raising of syndicated Islamic Term Finance Facility of Rs200bn to repay circular debt
ISLAMABAD: The Economic Coordination Committee (ECC) on Tuesday approved the Ministry of National Food Security’s proposal for allowing the export of 0.5 million tonnes of surplus wheat/wheat products by PASSCO for which it had received tenders.
The decision was made keeping in view the rising prices of wheat in the international markets, sufficient available stocks (1.7 million tons) and the predictions of a good crop in the current crop season.
According to documents available with Pakistan Today, the ministry, in compliance with the ECC decision and subsequent ratification of the Cabinet Division, had devised modalities, in consultation with the Ministries of Finance and Commerce, for the export of 0.5 million tonnes of surplus wheat/products.
As per the detail, the provincial governments and PASSCO would process export of wheat by placing the tenders in the tune of 0.5 million tonnes of wheat. Out of the 0.5 million tonnes of wheat, PASSCO will export 100,000 tonnes, Punjab will export 250,000 tonnes, and Sindh will be selling 150,000 tonnes.
The ECC on the occasion also allowed the Ministry of Energy to proceed with the raising of syndicated Islamic Term Finance Facility of Rs200 billion for which a term sheet had already been received from a consortium of Islamic banks.
During the meeting, which was chaired by Finance Minister Asad Umar, the ministry gave a detailed presentation on the current situation of circular debt and the components that have contributed to its build up.
Earlier, the ECC had constituted an inter-ministerial committee, comprising Power Division, Law Division and Finance Division, to prepare repayment plan of up to Rs200 billion structured Islamic financing facility to be arranged from a consortium of six banks led by Meezan Bank Limited against WAPDA, generation companies (GENCOs) and distribution companies (DISCOs) assets.
The option of Islamic financing against assets of Discos and Gencos was weighed after reaching the conclusion that the new NEPRA Act does not allow the government to impose a surcharge on consumers.
As per the details, in the first phase, six Islamic banks – Meezan Bank Limited, BankIslami Pakistan Limited, Faysal Bank Limited, MCB Islamic Bank, Dubai Islamic Bank Limited and Al Baraka Bank Limited – have committed to financing Rs100 billion to the facility on an immediate basis. Another tranche of Rs100 billion may be arranged from the Islamic banking industry as ‘Green Shoe Option’ (in the best effort basis).
The indicative commitments from the six banks included Meezan Bank Limited (Rs50 billion), BankIslami Pakistan Limited (Rs20 billion), Faysal Bank Limited (Rs20 billion), MCB Islamic Bank (Rs10 billion), Dubai Islamic Bank Limited (Rs8 billion) and Al Baraka Bank Limited (Rs5 billion). Meezan Bank will act as an investment agent.
During the meeting of ECC, the Ministry of Information Technology and Telecommunications briefed on the annual budget of National Telecom Corporation. The committee directed the ministry to address the management issues of NTC on priority, in view of the unsatisfactory responses to the queries raised by ECC members.