Pakistan has completed a record Rs. 659.6 billion settlement of Power Holding Limited debts. The development marks the largest transaction ever carried out in the country’s debt capital markets. The government considers the achievement a critical turning point for the power sector as it struggles with circular debt and financial instability.
Breakdown of the Rs. 659.6 Billion Settlement
The settlement includes two major components. First, Rs. 399.6 billion worth of Pakistan Energy Sukuk I and II bonds were redeemed. This process was completed through the National Depository Mechanism via off-market transactions.
Second, Rs. 259.7 billion was cleared across multiple syndicated financing facilities.
Because of this structure, the transaction highlights the strength of Pakistan’s financial markets. It also shows that the system can support large and strategic financial operations.
A Key Milestone in the Circular Debt Reduction Plan
The settlement forms a core part of the Rs. 1,225 billion Circular Debt Reduction Plan. Officials say the effort reflects growing institutional confidence in Pakistan’s economic reforms. It also supports the government’s drive to stabilize the energy supply chain.
Circular debt has long weakened the sector due to delayed payments, liquidity shortages, and inefficiencies. Thus, the latest development provides a much-needed financial reset.
Boost for Capital Markets and Islamic Finance
Experts believe this settlement strengthens Pakistan’s capital markets. Moreover, they say it shows the maturity of the country’s Islamic finance sector. The scale of the transaction signals that Pakistan can manage large-value debt operations without market disruption.
Because of this, analysts expect improved liquidity across the energy chain. They also expect better financial discipline in upcoming sector reforms.
Government Pushes for Deeper Structural Reforms
Officials state that the government remains committed to long-term reforms. They emphasize that restoring financial stability in the energy sector is essential for economic recovery.
The government also plans to work closely with industry players to maintain the current momentum. Its goal is to create a sustainable system capable of supporting future energy needs.
Analysts Expect a Longer-Term Impact
Financial specialists view the Rs. 659.6 billion transaction as a major milestone. They note that the settlement will improve investor confidence and support liquidity.
Additionally, they believe the move will help stabilize operations within struggling power companies. This improvement is expected to reduce stress on consumers and the national grid in the long run.
