CCoP seeks alternative to circular debt financing ahead of FESCO, GEPCO, IESCO privatisation

The Cabinet Committee on Privatisation has asked the Power Division and Finance Division to design a replacement for the Circular Debt Financing arrangement, so that loan repayments do not lift the government's equity after FESCO, GEPCO and IESCO are sold. Business Recorder reported the directive came as the committee cleared the deal structure for the three distributors. Until a replacement is agreed with the Privatisation Commission, no CDF allocations will be booked.

Retirement benefits for staff already retired will move into one government-owned special purpose vehicle covering all three companies. Land will be leased back on long-term terms still to be negotiated with prequalified bidders, with lease costs recovered through tariffs. Verified receivables will be netted against payables, and overdue re-lent Development Support Loan balances with accrued mark-up will be written off.

Draft balance sheets from audited accounts to March 31, 2026 show FESCO's assets falling to Rs285.20 billion from Rs408.31 billion, and equity to Rs62.87 billion from Rs87.92 billion. GEPCO's assets are forecast at Rs212.79 billion after falling from Rs335 billion, with equity dropping to Rs46.69 billion from Rs76.10 billion. IESCO is the exception, with equity rising to Rs110.74 billion from Rs88.59 billion even as its assets decline to Rs368.14 billion. The authorised capital of the three companies is to rise to Rs100 billion at FESCO, Rs75 billion at GEPCO and Rs125 billion at IESCO.