ISLAMABAD: The federal cabinet has instructed the Power Division to finalise all formalities required for the winding up of Power Holding Limited (PHL) and present a clear implementation timeline to the Economic Coordination Committee (ECC), sources told Business Recorder.
The directive was issued during the ECC meeting on *November 7, while approving a *Rs 659.6 billion government guarantee as part of the *Rs 1.225 trillion circular debt financing plan. The cabinet ratified the ECC decision on *November 12, 2025.
PHL, a fully government-owned entity under the Power Division, was originally created to manage power sector liabilities by securing loans on behalf of power distribution companies (DISCOs). Registered under the Companies Ordinance 1984, the company has long served as a financing vehicle for the sector, borrowing from banks and servicing interest on behalf of DISCOs.
Sources noted that the cabinet had earlier approved an Indicative Term Sheet on *June 18, 2025, aimed at settling PHL’s debt and overdue payments to Independent Power Producers (IPPs). Under this framework, the Central Power Purchasing Agency-Guarantee (CPPA-G) executed financing and security agreements with various banks on **October 3, 2025, enabling fresh borrowing of up to *Rs 1.225 trillion.
As per these agreements, the government must issue a new guarantee of *Rs 659.646 billion, replacing previous guarantees provided for PHL loans. A *Letter of Comfort from the Finance Division is also required as a condition precedent for the first drawdown, with the full guarantee to be issued within 30 days of that drawdown.
The Power Division had sought cabinet approval for:
- Issuance of the GoP guarantee;
- Authorization for the Finance Division to issue the Letter of Comfort immediately; and
- Authorization to issue the final guarantee within the stipulated 30 days.
Officials said the proposal to dissolve PHL originated from the Finance Division and was endorsed first by the ECC and subsequently by the federal cabinet, paving the way for the company’s formal winding up.
Story by Mushtaq Ghumman
