Power Holding Limited has announced plans to redeem two of Pakistan’s largest Islamic bond issues ahead of schedule, marking a significant development in the country’s energy financing landscape. The company’s board of directors has approved the early redemption of Pakistan Energy Sukuk-I (PESC-I) and Pakistan Energy Sukuk-II (PESC-II), together valued at almost Rs400 billion.
According to a formal notification shared with the Pakistan Stock Exchange (PSX), PESC-I carries a value of Rs200 billion and was originally issued in March 2019 as Shariah-compliant sukuk certificates. PESC-II, worth Rs199.97 billion, was issued in May 2020. Both bond tranches were sold as listed securities, available to eligible institutional and retail investors, with Meezan Bank Limited serving as trustee and investment agent for the transactions.
The decision to move toward early redemption is seen as part of Power Holding Limited’s strategy to strengthen its balance sheet, optimize its capital structure, and potentially lower its financing costs. While the company has not disclosed specific reasons for the timing of this move, analysts suggest that reducing reliance on costly debt instruments amid a volatile economic climate may be a driving factor.
As part of the redemption process, all outstanding principal amounts, along with accrued profit or rental, will be returned to certificate holders. The payouts will be subject to statutory deductions, including zakat and withholding taxes. Power Holding Limited has assured that the settlement will be carried out in full compliance with applicable regulatory and Shariah requirements.
However, the process still requires key approvals. The company must obtain clearance from the Pakistan Stock Exchange as well as other relevant regulators before proceeding. Once approvals are secured, the final redemption date will be determined in coordination with Meezan Bank, which will oversee the execution on behalf of investors.
Formal notices of intent will soon be issued to all certificate holders, providing detailed timelines and procedures for the early redemption. This step is crucial for transparency and investor confidence, ensuring stakeholders are fully informed of the process ahead.
The redemption marks a turning point for Power Holding Limited, which has historically relied heavily on sukuk structures to raise funds for energy sector liabilities. The Pakistan Energy Sukuk programs, particularly PESC-I and PESC-II, were introduced to address the chronic circular debt issue in the power sector by mobilizing liquidity through Islamic financial instruments. By retiring these sukuk ahead of maturity, the company could ease future debt servicing obligations while sending a signal of fiscal discipline to markets.
For Pakistan’s broader energy and capital markets, the move highlights the evolving role of Islamic finance in managing state-linked obligations. Sukuk instruments have provided critical liquidity over recent years, but early redemption may also encourage future issuances to adopt more flexible and market-oriented structures.
If executed smoothly, this early settlement could improve investor sentiment in Pakistan’s Islamic capital market and provide the government with a stronger platform to introduce new financial instruments aimed at addressing energy sector challenges.
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