ISLAMABAD: The federal government has executed a Shariah-compliant financing transaction worth Rs930 billion to help reduce circular debt in the power sector, officials of the Central Power Purchasing Agency-Guarantee (CPPA-G) told a public hearing of the National Electric Power Regulatory Authority (Nepra) on Tuesday.
Thank you for reading this post, don't forget to subscribe!During the hearing, CPPA-G officials said the financing transaction was Pakistan’s largest-ever Islamic financing deal of its kind and had enabled settlements in support of the government’s circular debt reduction efforts.
The company also highlighted initiatives that it said had generated Rs183.4 billion in relief for electricity consumers. It cited savings of Rs184.53 billion through amended and negotiated settlement agreements facilitated by a government task force, with benefits passed on to consumers through tariff adjustments. The power sector also achieved financial stability following the realisation of Rs795 billion in subsidies, officials said.
According to the company, negotiations with wind, solar and nuclear power producers under power purchase agreements helped rationalise tariffs and reduce costs for consumers. These measures included tariff reductions and waivers of late payment surcharges.
CPPA-G manages commercial invoicing and payments for a portfolio covering 39,936 megawatts of generation capacity under 112 active power purchase and energy purchase agreements. During fiscal year 2025-26, it processed power purchase invoices exceeding Rs3 trillion.
Request for multi-year tariff petition deferred
At the hearing, CPPA-G requested Nepra to allow it to file its Multi-Year Tariff (MYT) petition from fiscal year 2027-28 instead of submitting it immediately, while seeking consideration of a single-year tariff petition for the current period.
The company told the regulator that its board had directed management to conduct a comprehensive assessment based on realistic assumptions, operational requirements and projected capital expenditure to ensure the proposed tariff reflected its legitimate and sustainable financial needs.
CPPA-G said the assessment was underway and was expected to be completed in time for the filing of the multi-year tariff petition for FY2027-28.
The regulator also examined whether the company’s reasons for seeking an exemption from immediate MYT filing were justified.
Establishment costs projected to decline
The hearing was also informed that CPPA-G’s establishment expenditure stood at Rs2.524 billion in FY2025-26, including Rs1.627 billion for salaries and allowances, Rs349 million for employee benefits, Rs199 million in bonuses, Rs32 million for training and capacity building, Rs19 million for consultancy services, and Rs298 million for new hiring and related benefits.
For FY2026-27, the company has sought establishment expenditure of Rs2.504 billion, comprising Rs1.792 billion for salaries and allowances, Rs391 million for employee benefits, Rs106 million for bonuses, Rs25 million for training and capacity building, Rs15 million for consultancy services, and Rs175 million for new hiring and related benefits.
The proposed expenditure represents a reduction of Rs20 million compared with the previous fiscal year, despite changes in the allocation of individual cost components.
Questions were also raised during the hearing regarding new appointments made by CPPA-G.
The company further stated that, in recognition of its contribution to the government’s circular debt financing initiative, the president had conferred the Sitara-e-Imtiaz on its chief executive officer and another official.
Story by Zafar Bhutta
