ISLAMABAD: A syndicate of seven commercial banks has reportedly refused to extend further loans to the “unsustainable” power sector if overdue principal portion of loans is not cleared prior to seeking a new facility of Rs 40 billion, well informed sources told Business Recorder.

The Economic Coordination Committee (ECC) of the Cabinet on March 7, 2018 approved the proposal of raising fresh funds amounting to Rs.80 billion through syndicated term finance facility for power sector liquidity. The ECC also approved to pay-off the overdue principal till March 2018 amounting to Rs 26.666 billion in respect of existing facilities of: (i) Rs 15.00 billion; (ii) Rs. 40.00 billion; and (iii) Rs25.00 billion respectively by utilizing proceeds from the Rs 80.00 billion finance facility and transfer the remaining funds of Rs 53.333 billion to CPPA-G to discharge its liabilities against power sector entities.

In response to the request to commercial banks regarding conveying their appetite and other terms and conditions in order to execute the fresh financing facility of Rs.80.00 billion, (i) National Bank of Pakistan (NBP), (ii) United Bank Limited (UBL), (iii) Allied Bank Limited (ABL), (iv) Bank Alfalah Limited (BAFL), (v) Bank AI Habib Limited (BAHL), (vi) JS Bank Limited (JSBL) and (vii) Bank of Khyber (BOK) agreed to participate in the facility subject to the condition that Rs 1.011 billion being the overdue principal portion till March 2018 on account of two principal installments in respect of existing term finance facility of Rs 6.069 billion shall also be paid in addition to the (i) existing facilities of Rs 15 billion, (ii) Rs 40.00 billion and (iii) Rs 25 billion otherwise disbursements of relevant portions by the members shall not be made.

Published in Business Recorder, 28th May, 2018

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