KARACHI: The banks have agreed to lend Rs85 billion to the government through Term Finance Certificates, to help pay debt to oil and power companies.
The five-year bonds will be priced at 2 percentage points above six-month Karachi interbank offered rate, which was 12.67 percent on Thursday, Masroor Ahmad Qureshi, head of debt department in Finance Ministry was quoted as saying by Bloomberg. The banks will provide the funds in a day or two, he added.
The government is raising funds on behalf of state- owned Pakistan Electric Power Company to pay companies like Pakistan State Oil, biggest fuel retailer, and power companies for delayed payments for fuel and electricity. The funds will help reduce circular debt within state- run energy companies.
Privately owned power producers sell electricity to Pakistan Electric Power for transmission and distribution. The non-state electricity producers had reduced production causing shortages of as much as one-third of capacity because of rising debt in past two years.
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