Pakistan will pay CPEC IPPs Rs50 billion.

Before Prime Minister Shehbaz’s travel to China, a decision was reached to deliver a constructive message to Beijing. To prevent default and send a good signal across the border before Prime Minister Shehbaz Sharif’s visit, Pakistan has agreed to pay Rs 50 billion to four CPEC power projects early next week in ISLAMABAD.

Pakistani and Chinese representatives met on Friday to reach an agreement. Miftah Ismail, Malaysia’s Minister of Finance, chaired the meeting, which included representatives from the top Chinese power companies.

According to a statement released by the Ministry of Finance, the conference focused on the unpaid payments to the Chinese IPPs in Pakistan and other impediments they encountered.

According to an official, it was determined at the meeting that Pakistan would pay Rs50 billion to four Chinese power companies in their own currency rather than US dollars.

Pakistan still owes the Huaneng Shandong Ruyi company Rs74 billion for electricity generated at the Sahiwal power plant, despite having paid over 90% of the invoiced amount.

In the same vein, the government would owe Rs32 billion to the Engro Powergen project and Rs70 billion to the Port Qasim power plant. Hub power plant has an Rs65 billion debt.

Since Pakistan has not yet opened a bank account to save the Chinese power plants from circular debt, the Rs50 billion paid to the four plants will only address their financial woes to a limited extent.

Delay in clearing their dues, mainly on account of idle capacity payments and partly on power purchase costs, has severely harmed the financial health of China’s power plants.

12 Chinese power plants are owed at least Rs269 billion by the Pakistani government as of this week, according to authorities.

The Chinese manufacturers should have a clear plan for paying off all debts by June next year, per directives from China’s finance minister.

The government of Pakistan, however, has made such assurances before. To get the CPEC power plants up and running before the previous prime minister Imran Khan went to Beijing in February, he authorized payments of Rs50 billion.

Additionally, he assured the Chinese IPPs that he would establish a particular bank account to help them avoid going into a debt cycle. However, it did not occur.

According to reliable sources, Prime Minister Shehbaz Sharif may soon go to Beijing, and the administration is eager to make a good impression before his arrival.

According to the statement, the finance minister said that the government is committed to offering Chinese investors a full range of services. He reassured the Chinese IPPs that their issues would be looked at and fixed immediately.

Intending to calm the nerves of Chinese investors, the minister also established a technical group comprised of officials from the Finance and Power Divisions.

Before paying off its debts, the IMF has requested that Pakistan negotiate with Chinese manufacturers to reduce the return on equity and prolong the loan payback term beyond ten years.

Therefore, Pakistan has already assured the IMF in writing that it would “strive to minimise capacity payments, as we settle the arrears, either by renegotiating the PPAs [Power Purchase Agreements] or by stretching the tenure of bank loans.”

Pakistan informed the IMF that it had fallen behind in paying capacity charges due to Chinese power producers and the need to reimburse rising fuel costs.

However, according to a Chinese energy expert, the discussions and debt restructuring of CPEC power projects might have an annual financial effect of Rs10 billion to Rs50 billion.

To do this, he said, all overseas parties engaged would have to switch their guarantee or investment organization, which would have a negligible impact on rupee terms.

The Chinese government claims the IMF is ignoring a yearly loss of Rs500 billion in revenue for power distribution businesses.

Facebook Comments Box

Leave a Reply

Your email address will not be published.

10 Best Foods Must Try in Your Lifetime 10 Weight Loss Tricks Can Change your Body Completely Sivani Sangita ‘s new film Kiss Miss 10 EASY WAYS TO KEEP YOUR DOG HAPPY The Best Foods in The World Ten most beautiful animals in the world
10 Best Foods Must Try in Your Lifetime 10 Weight Loss Tricks Can Change your Body Completely Sivani Sangita ‘s new film Kiss Miss 10 EASY WAYS TO KEEP YOUR DOG HAPPY The Best Foods in The World Ten most beautiful animals in the world
Enable Notifications    OK No thanks