The cash-strapped government has planned to raise funds through Sukuks, which will be issued against various identified assets including the Islamabad Metro, Islamabad Expressway, and Islamabad Sports Complex.
According to the State Bank of Pakistan (SBP), these underlying assets fall under the domain of the Capital Development Authority located on its undisputed land. These lands would be identifiable by survey numbers and area and would be identified as the proposed assets to facilitate the issuance of the Government of Pakistan Ijarah Sukuk.
The part of assets that will be dedicated to Sukuk is Islamabad Expressway (From Faisal Mosque Chowk to T-Chowk near Rawat), Â Islamabad Metro (Islamabad Portion), and the complete Islamabad Sports Complex.
The banking regulator will restructure the value of Sukuk against these assets before it will be auctioned. Furthermore, if these Sukuk are subscribed by the financial institutions for varied periods, the rental and other income will be earned by the subscriber of the Sharia-compliant instruments.
The SBP will conduct an auction through which Sukuk Investors will be identified. Non-competitive bidders may also submit their bids for the Sukuk. For this purpose, non-competitive bidders will authorize any of the primary bidders through the signing of an authorization form. In this regard, the calendar of the auction will be made public in the coming weeks.
According to the details provided by the SBP, the investors will execute the Sukuk Subscription Undertaking to record the commitments of the Investors to subscribe to the Sukuk to be issued by Pakistan Domestic Sukuk Company Limited (PDSCL).
Under the Sukuk Subscription Undertaking, the Investors may appoint PDSCL as their agent (Investment Agent) for the purchase of the assets on their behalf and for the purposes set out in Sukuk Issuance Undertaking.
The Ijarah agreement(s) provide that it shall automatically terminate if a total loss event occurs and the Lessor will be entitled to any insurance/takaful proceeds payable as a result of the total loss event.
The government (acting through MoF) will execute a Purchase Undertaking in favor of the PDSCL to purchase the Sukuk Assets at the Exercise Price at maturity or upon an Event of Default.
