ISLAMABAD - The government has arranged financing facilities of Rs 151 billion from domestic banks for PEPCO to enable them to pay off their liabilities towards IPPs and other companies, which would help reduce the burden of circular debt in power sector.

The financing facilities for PEPCO system was approved by the Economic Coordination Committee of the Cabinet on January 20th, 2012. The intervention comprises two tranches i.e. first tranche of Rs 136 billion, which was executed on February 21st, 2012 and the second tranche of Rs 15 billion which is expected be concluded shortly.

The provision of financing facilities is expected to ease up the circular debt in power sector and enhance liquidity of the system. With improved liquidity, the generation companies will have funds to buy fuel thus improving the overall supply of electricity and bringing down the unscheduled loadshedding in the country.

 The transaction would not have any impact on the Federal budget as the debt servicing of the aforementioned facilities would be done out of the cash flows of PEPCO system.\