Cabinet directs PD to complete PHL winding up process

ISLAMABAD: The federal cabinet has directed the Power Division to complete all necessary formalities leading to the winding up of the Power Holding Limited (PHL) and submit an attendant timeline to the Economic Coordination Committee (ECC), sources told Business Recorder. These directions were issued by the ECC on November 7 while approving the issuance of the GoP guarantee amounting to Rs 659.6 billion for circular debt financing totaling Rs 1.225 trillion, which has been ratified by the Cabinet on November 12, 2025. The PHL is under the administrative control of the Ministry of Energy (Power Division) and is wholly owned by the Government of Pakistan. The company was established to reduce power sector liabilities through borrowings from financial institutions. The PHL is a not-for-profit entity registered under the Companies Ordinance, 1984. Power Holding Ltd approves early redemption of Rs400bn Pakistan Energy Sukuk The company was being used to borrow from banks on behalf of the power Distribution Companies (DISCOs) and pay interest to the banks on loans. Sharing the details, sources said, the Federal Cabinet approved an Indicative Term Sheet for CD Financing on June 18, 2025, for the settlement of the PHL debt and overdue payments to Independent Power Producers (IPPs). The Central Power Purchasing Agency-Guarantee (CPPA-G) is a Public sector entity and is responsible for arranging fresh facilities up to Rs 1.225 trillion. The financing and security agreements for circular debt financing amounting to Rs. 1.225 trillion were executed on October 3, 2025, between CPPA-G and various financial institutions. In terms of the Federal Cabinet’s approval and executed Financing Agreements, the first demand, irrevocable, unconditional and continuing Government of Pakistan’s Guarantee amounting to Rs. 659.646 billion (Guaranteed Principal Amount) is required to be issued by the Finance Division on behalf of the Government of Pakistan. The Guarantee shall replace the following earlier guarantees issued by the GoP in favor of the PHL loan of the same amount and will not affect any debt limitation of the GoP. Under the terms of the executed Financing Agreements, a Letter of Comfort was required to be initiated by the Finance Division upon the approval of the ECC. Security Agent (HBL) will accept Letter of Comfort as satisfactory compliance with the condition precedent to the first drawdown of the CD Financing. However, the Finance Division has been requested to issue the GoP Guarantee within 30 days of the first drawdown of the CD Financing. The Power Division, in its summary, had sought approval of the Government on the following proposals; (i) issuance of GoP guarantee amounting to Rs. 659.646 billion guaranteed principal amount by the Government of Pakistan; (ii) authorization to Finance Division to issue letter of comfort on an immediate basis; and (iii) authorization to Finance Division to issue GoP guarantee within 30 days of first drawdown under the executed Financing Agreements. According to sources, the proposal regarding winding up of the PHL came from the Finance Division, which was duly endorsed by the ECC and the federal cabinet. Copyright Business Recorder, 2025

These directions were issued by the ECC on November 7 while approving the issuance of the GoP guarantee amounting to Rs 659.6 billion for circular debt financing totaling Rs 1.225 trillion, which has been ratified by the Cabinet on November 12, 2025.

The PHL is under the administrative control of the Ministry of Energy (Power Division) and is wholly owned by the Government of Pakistan. The company was established to reduce power sector liabilities through borrowings from financial institutions. The PHL is a not-for-profit entity registered under the Companies Ordinance, 1984.

Power Holding Ltd approves early redemption of Rs400bn Pakistan Energy Sukuk

The company was being used to borrow from banks on behalf of the power Distribution Companies (DISCOs) and pay interest to the banks on loans.

Sharing the details, sources said, the Federal Cabinet approved an Indicative Term Sheet for CD Financing on June 18, 2025, for the settlement of the PHL debt and overdue payments to Independent Power Producers (IPPs).

The Central Power Purchasing Agency-Guarantee (CPPA-G) is a Public sector entity and is responsible for arranging fresh facilities up to Rs 1.225 trillion. The financing and security agreements for circular debt financing amounting to Rs. 1.225 trillion were executed on October 3, 2025, between CPPA-G and various financial institutions.

In terms of the Federal Cabinet’s approval and executed Financing Agreements, the first demand, irrevocable, unconditional and continuing Government of Pakistan’s Guarantee amounting to Rs. 659.646 billion (Guaranteed Principal Amount) is required to be issued by the Finance Division on behalf of the Government of Pakistan.

The Guarantee shall replace the following earlier guarantees issued by the GoP in favor of the PHL loan of the same amount and will not affect any debt limitation of the GoP.

Under the terms of the executed Financing Agreements, a Letter of Comfort was required to be initiated by the Finance Division upon the approval of the ECC. Security Agent (HBL) will accept Letter of Comfort as satisfactory compliance with the condition precedent to the first drawdown of the CD Financing. However, the Finance Division has been requested to issue the GoP Guarantee within 30 days of the first drawdown of the CD Financing.

The Power Division, in its summary, had sought approval of the Government on the following proposals; (i) issuance of GoP guarantee amounting to Rs. 659.646 billion guaranteed principal amount by the Government of Pakistan; (ii) authorization to Finance Division to issue letter of comfort on an immediate basis; and (iii) authorization to Finance Division to issue GoP guarantee within 30 days of first drawdown under the executed Financing Agreements.

According to sources, the proposal regarding winding up of the PHL came from the Finance Division, which was duly endorsed by the ECC and the federal cabinet.