The Boards of Pakistan’s Capital Market Infrastructure Institutions (CMIIs), Pakistan Stock Exchange (PSX), National Clearing Company of Pakistan Limited (NCCPL) and Central Depository Company (CDC), have approved waivers on all applicable taxes, fees and margin requirements for the sale and purchase of Pakistan Energy Sukuks (PES) to support the federal government’s Rs1.225 trillion circular debt management plan, Business Recorder reported.
The decision follows the government’s approval last month of a Power Division summary seeking a sovereign guarantee of Rs659.646 billion as part of the financing package.
CPPA-G CEO Rihan Akhtar, in a letter to PSX, said the government has endorsed a plan to clear circular debt by 2031 through Shariah-compliant financing arranged from 18 banks.
PSX CEO Farrukh H. Sabzwari said the CMIIs reviewed the proposal in detail and recognised its strategic importance. He stated that PSX “appreciates the Federal Government’s plan to settle the circular debt by 2031” and acknowledged the essential role of market institutions in facilitating the transactions. On the recommendations of their CEOs, the Boards of PSX, NCCPL and CDC waived all margin requirements for Sukuk holders and CPPA-G, along with all transaction fees for buyers and sellers through the PSX Negotiated Deal Market (NDM). PSX noted that the waiver aims to support “economic stability and strategic objectives of Pakistan.”
According to the financing structure, the government has arranged Rs1,225 billion at a rate of three-month KIBOR minus 0.9%, repayable in 24 instalments. Of this, Rs660 billion will be used to retire debts parked in Power Holding Limited (PHL), while Rs565 billion will clear overdue payments to independent power producers (IPPs). Repayments will be made through a Debt Service Surcharge under the NEPRA Act.
The Shariah structure includes an Ijara SLB facility of up to Rs825 billion against distribution company (DISCO) assets and a Bai-Muajjal facility of up to Rs400 billion. Due to limited available assets, CPPA-G noted that timely execution of the Bai-Muajjal financing is critical.
The transaction requires CPPA-G, acting as the agent of the Investment Agent, to purchase Pakistan Energy Sukuk I and II from existing holders, after which the Sukuks will be redeemed and CPPA-G will repay the purchase price in 24 quarterly instalments. Approximately 99% of Sukuk holders have already consented to redemption.
The settlement will be executed on PSX through the NDM at T+1. CPPA-G highlighted that without the waivers, the margin requirements and cumulative fees of PSX, NCCPL and CDC, when applied to Sukuks worth Rs400 billion, would impose significant costs on market participants, necessitating the exemptions now approved.
