Govt executes Rs930 billion Islamic financing deal to reduce power sector circular debt

The federal government has completed an Islamic financing arrangement worth Rs930 billion to help bring down power-sector circular debt, according to Profit by Pakistan Today. The Central Power Purchasing Agency-Guarantee (CPPA-G) disclosed the transaction at a hearing before the National Electric Power Regulatory Authority (Nepra), saying settlements had been made under the government’s debt-reduction programme. It also cited Rs183.4 billion in consumer relief, alongside Rs184.53 billion in savings from revised and negotiated deals with power producers that were reflected in tariff adjustments.

CPPA-G said tariff costs were reduced through revised terms with wind, solar and nuclear generators, including waivers of late-payment surcharges, and reported receiving Rs795 billion in government subsidies. It asked Nepra to let it file its multi-year tariff proposal in FY2027-28, while its board reviews projected operating and capital needs. The agency oversees 112 active purchase agreements representing 39,936 megawatts and processed invoices above Rs3 trillion in FY2025-26. It also sought Rs2.504 billion for FY2026-27 administrative expenses, down Rs20 million from the prior year; Nepra questioned the hiring plan and delay.