The Economic Coordination Committee (ECC) of the cabinet has taken decisive action to address Pakistan’s power sector crisis. Specifically, the committee, chaired by Finance Minister Muhammad Aurangzeb, approved a sovereign guarantee for a massive Rs1.23 trillion loan and a major waiver for a state-owned energy entity. Consequently, these measures aim to resolve persistent circular debt and stabilise the energy and fertiliser sectors.
First, the ECC approved the issuance of a Rs659.6 billion sovereign guarantee. This action directly facilitates a total circular debt financing package of Rs1.225 trillion, which will settle the debt of Power Holding Limited (PHL) and overdue payments to Independent Power Producers (IPPs).
Crucially, the committee also authorised the Finance Division to issue a “Letter of Comfort” to commercial banks. This letter provides a government assurance for the loan, meeting a key demand from lenders who had previously refused disbursement due to the power sector’s poor fiscal health. As a result, Habib Bank Limited can now proceed with the first drawdown of funds.
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In a parallel decision, the ECC approved an arrangement to waive Rs120 billion in late payment interest that the Pakistan Atomic Energy Commission (PAEC) owed to its fuel suppliers. As part of this settlement, the government will pass on a Rs22 billion financial obligation to gas consumers.
Furthermore, the ECC authorised the Central Power Purchasing Agency-Guarantee (CPPA-G) to execute negotiated settlement agreements with PAEC. Additionally, the committee enabled PAEC to file new tariff petitions with NEPRA for its five nuclear power plants, reflecting these debt adjustments.
To bolster the agricultural sector, the ECC decided to connect the plants of Fatima Fertiliser, Agritech, and Fauji Fertiliser Bin Qasim to Mari Energies’ gas supply network. Under this arrangement, Mari will supply 170 mmcfd of gas to these plants over the next two years from a new field, leveraging a $200 million investment.
This landmark decision means that all 10 fertiliser plants in the country now connect to Mari Energies. Therefore, the move should ensure a more adequate and affordable domestic supply of fertilise
