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Business Recorder
23-06-2025
- Business
- Business Recorder
Debt shift, not debt reform
The government has finally laid out the numbers behind what it calls a 'power sector reform milestone.' At the heart of the plan is the promise to clear Rs2.4 trillion in circular debt (CD) stock, a long-standing source of fiscal haemorrhage and economic distortion. One might assume this announcement heralds structural correction, long-term efficiency, and consumer relief. But the details tell a different story. A large part of this so-called reform involves borrowing Rs1.25 trillion from commercial banks to retire existing Power Holding Limited (PHL) loans and clear residual interest-bearing arrears owed to power producers. This new debt is to be repaid over six years through 24 equal quarterly instalments, totalling Rs1.938 trillion. Now here's the kicker: the government claims that this facility is secured at three-month KIBOR minus 0.9 percent, as agreed with the IMF. This rate today equates to roughly 10.1 percent per annum. But the math simply does not add up. A Rs1.275 trillion loan repaid in Rs1.938 trillion over six years implies an effective annual interest rate of around 17.2 percent, assuming standard amortization. That is a full seven percentage points higher than the stated concessional rate. Unless the loan was locked in when KIBOR was at 18 percent - or is structured with heavily back-loaded payments or embedded escalators - there is a clear credibility gap between what is being claimed and what is being paid. The government needs to explain this gap. Was KIBOR frozen at the time of agreement? Are there compounding mechanics hidden under the hood of the Islamic finance structure? Is the 'KIBOR minus 0.9%' a red herring for a far more expensive reality? Worryingly, this is not just about opaque pricing. It is about who foots the bill. Because the loan will be repaid not by the fiscal budget, but by consumers, through the Debt Service Surcharge (DSS) on electricity bills, which have been set at 10 percent of Nepra's determined revenue requirement and now set to become uncapped. If the DSS collection falls short, it will be raised. If projections show a future shortfall, it will be pre-emptively raised. That is not reform. That is shifting the entire burden of past mis governance, theft, non-recovery, and political expediency onto paying consumers. For six straight years. This is not the retirement of circular debt. This is its refinancing and repackaging as consumer debt, backed by law, buried in your electricity bill, and enforced by NEPRA. It solves none of the underlying inefficiencies: transmission losses, governance failures, unchecked subsidies, DISCO mismanagement, which created the CD crisis to begin with. This plan may look clean on government balance sheets and help Pakistan check boxes on the IMF's program matrix. But from the perspective of the average paying consumer — the very same who already bears the weight of capacity charges, taxes, and losses — this is nothing short of an institutionalized penalty. A reform that raises no efficiency, cleans no value chain, and punishes compliance is not is a relabelling exercise: expensive, regressive, and deeply unfair. Copyright Business Recorder, 2025
GMA Network
22-06-2025
- Sport
- GMA Network
Alex Eala overcomes top seed Baptiste to enter Eastbourne Open main draw
Mar 27, 2025; Alex Eala (PHL) reacts after winning a point against Jessica Pegula (USA) in a women's singles semifinal on day ten of the Miami Open. (Photo: Geoff Burke-Imagn Images/REUTERS) Filipina tennis ace Alex Eala overcame top seed Hailey Baptiste of the United States, 6(1)-7, 7-6(4), 6-1, on Sunday in the second round of the Eastbourne Open qualifying draw to book a slot in the tournament's main draw. After a neck-and-neck affair in the first two sets, world no. 77 Eala dominated the world no. 56 Baptiste in the third set to take a 5-0 lead before cruising to the victory after a two-hour and 47-minute match. In the first round, Eala defeated Turkish Zeynep Sonmez, 6-1, 6-3. —JKC, GMA Integrated News
Business Recorder
19-06-2025
- Business
- Business Recorder
Rs1.275trn loan deal finalised with banks
ISLAMABAD: The Federal Cabinet on Wednesday approved a long-anticipated agreement between the Government of Pakistan (GoP) and approximately 18 commercial banks for a landmark Rs 1.275 trillion loan, following intense negotiations over each clause. Sources in Power Division told Business Recorder, the loan aims to address a portion of the country's ballooning circular debt, currently estimated at around Rs 2.4 trillion. The International Monetary Fund (IMF) has already endorsed the government's circular debt reduction plan, which includes borrowing from commercial banks. Of the total circular debt, about Rs 700 billion is already carried on the books of the Power Holding Company Limited (PHL), on behalf of the power distribution companies (Discos). Rs1.275trn loan to tackle circular debt: CPPA-G likely to sign term sheets with 18 banks Under the agreement, commercial banks will provide fresh loans amounting to Rs 683 billion at an interest rate of 10.5%–11%, pegged to the Karachi Inter-bank Offered Rate (KIBOR) minus 0.90 basis points. Repayment will be made over six years via the Debt Service Surcharge (DSS), which is currently charged to electricity consumers at Rs 3.23 per unit. Notably, this mechanism ensures there will be no additional burden on the national treasury. According to the approved plan, the Rs 683 billion in financing will be used to clear PHL's outstanding liabilities. Repayment will occur in 24 semi-annual installments, with an annual ceiling of Rs 323 billion. In the event of rising interest rates, the total repayment cap has been set at Rs 1.938 trillion. Earlier reports suggested that banks had requested a guarantee from the State Bank of Pakistan in case the government defaulted. Sources familiar with the negotiations revealed that government representatives reminded the banks of the potential risks to their investments should the power sector collapse—an implicit warning aimed at expediting the deal. However, an official denied that any threats were made, stating that banks were simply asked to appreciate the seriousness of the situation. In response to concerns about delays in finalizing the term sheets, one key stakeholder dismissed such claims. 'There's no delay—we're just ironing out final details. This is a massive, unprecedented transaction in Pakistan, so it's natural that many elements require careful attention,' the official said. Official documents confirm that the government has committed to the IMF to borrow Rs 1.252 trillion from banks—Rs 683 billion to settle existing PHL loans, and Rs 569 billion to clear remaining interest-bearing arrears owed to power producers. Copyright Business Recorder, 2025
Yahoo
10-06-2025
- Business
- Yahoo
Healthcare firm Totally collapses but divisions sold
Former NHS 111 urgent care provider Totally (TLY.L) has collapsed into administration, but said a deal to sell its main divisions will see the 'uninterrupted provision' of all its services. Totally has shed about half its workforce since last year and around 100 jobs are being put at risk as part of the deal announced on Monday. The Derby-based healthcare firm – which lost the NHS 111 support contract in February this year – has appointed Ernst & Young partners Tim Vance and Sam Woodward as joint administrators after failing to secure bids or strategic investors for the entire firm. It said that following the appointment, the sale of its selective care and corporate wellbeing subsidiaries, as well as the urgent care division, was completed to rival PHL Group. 'This transaction sees the continued and uninterrupted provision of all services previously delivered by the group,' Totally said. Totally employed around 1,400 staff at the end of March 2024. By the time it appointed administrators at EY on Friday, it had some 750 employees following two rounds of redundancies. More than 600 of those have been immediately transferred to the new owners following the sale to PHL – meaning that some 100 roles are at risk of redundancy. Mr Vance said: 'We are pleased to have agreed the sale of Totally which safeguards critical frontline NHS services and includes the retention of over 600 jobs.' Totally added: 'PHL Group will make separate announcements shortly, including communication with the customers, suppliers and employees of the elective care and urgent care divisions, and the corporate wellbeing business, which are all continuing to provide all services as normal following the transaction.' The company's failure comes after a difficult past year, with the firm losing the NHS 111 contract worth £13 million and then revealing last month it was facing a potential medical negligence claim related to an incident in January 2018. At the time, it warned the size of the liability for the claim could be more than the £10 million claim limit on its insurance policy. It launched a strategic review to look at options, including the sale of subsidiaries 'receiving strategic investment or undertaking some other form of comparable corporate action'. Shares in the firm plummeted at the time. On June 6, it announced its intention to appoint administrators after the review had failed to see any 'solvent' offers for parent firm Totally and suspended its shares from trading on London's junior Aim market. PHL – the buyer of its trading divisions – was launched in 2009 and runs services in the UK and overseas, including integrated urgent care, urgent treatment centres, surgical insourcing, custody healthcare, ADHD services and general practice.
Business Recorder
02-06-2025
- Business
- Business Recorder
Power sector debt: Govt secures historic Rs1.275trn loan deal from banks
ISLAMABAD: After months of negotiations on term sheets and legal formalities, the government has finalized agreements for a historic loan package of Rs 1.275 trillion with approximately 18 commercial banks to address the growing circular debt in the power sector. According to sources, the draft agreements are now ready for final approval by the Federal Cabinet. The loan aims to offset a portion of the circular debt, which currently stands at approximately Rs 2.3 trillion. The government has already secured the International Monetary Fund's (IMF) endorsement for its circular debt reduction plan, which includes borrowing from commercial banks. Of the total debt, around Rs 700 billion is currently held on the books of the Power Holding Company Limited (PHL) on behalf of the power distribution companies (Discos). Rs1.275trn loan to tackle circular debt: CPPA-G likely to sign term sheets with 18 banks During ongoing discussions with the IMF Review Mission, both the Finance Division and the Power Division briefed the mission on the status of negotiations with commercial banks and the terms outlined in the draft agreements. Under the deal, commercial banks will extend fresh loans amounting to Rs 617 billion at an interest rate of 10.50–11 percent, pegged to the Karachi Interbank Offered Rate (KIBOR) minus 0.2 percent. Repayments will be made over six years through the Debt Service Surcharge (DSS), which is currently charged to consumers at Rs 3.23 per unit in electricity bills. To meet IMF structural benchmarks, the government also plans to uncap the DSS, which currently represents 10 percent of the total revenue of power companies. This will be done through a legislative amendment, enabling the payment of interest and partial repayments of loans raised by PHL that appear on Discos' balance sheets. 'We have finalized all necessary documentation and term sheets with the banks, and these are expected to be approved before Eid (this week),' a source confirmed. Earlier reports suggested that commercial banks had requested guarantees from the State Bank of Pakistan in case of government default. However, sources indicated that government negotiators emphasized the systemic risk to banks' investments if the power sector were to collapse—an implied warning rather than a direct threat. A government official denied any coercion, stating that banks were merely urged to recognize the severity of the situation. 'This is a massive, unprecedented transaction in Pakistan, so naturally, many aspects needed to be carefully finalized,' the official said. Another senior official involved in the initiative confirmed that all outstanding matters with the banks have been resolved. 'The indicative term sheet was signed by all banks last week. It now awaits approvals from the federal cabinet and the CPPA-G Board. A summary will be submitted to the cabinet next week, after which the loan documentation will be completed within three to four weeks,' he explained. Loan disbursements are expected before the end of the current month so that reduced figures of circular debts are shown in the budget documents. According to official documents, the government has committed to borrowing Rs 1.252 trillion from commercial banks to repay all outstanding PHL loans (Rs 683 billion) and settle the remaining interest-bearing arrears owed to power producers (Rs 569 billion). The loan is expected to be secured at more favourable terms than those currently applied to the existing circular debt—one of the primary factors contributing to its accumulation. Repayments will be made over six years through DSS collections. Copyright Business Recorder, 2025
