Thursday, July 18, 2024

China Demands $1.5 Billion Pending Payments from Pakistan

China has expressed serious reservations about overdue payments of $1.5 billion to the Chinese independent power plants (IPPs), installed under the China-Pakistan Economic Corridor (CPEC), as well as currency exchange restrictions imposed by the State Bank of Pakistan, which hamper coal import.

Special Assistant to Prime Minister (SAPM) (Coordination) Syed Tariq Fatemi, in a letter to the Planning Commission on March 13, 2023, conveyed that China’s Charge d’ Affaires Pang Chunxue met him on Monday where she voiced concern over the CPEC power projects.

“Overdue payments to the Chinese IPPs currently stand at $1.5 billion. This is causing huge concern among Chinese businesses,” Fatemi stressed, adding that Pang also complained that Chinese power plants at Hub, Sahiwal and Port Qasim were facing currency exchange restrictions, which was causing difficulty in coal import.

“These power plants require a specific-grade coal for electricity production. If the same is purchased from the local spot market, then Nepra requires that the price should not be higher than the price of imported coal, which is not feasible due to exchange rate fluctuation/ rupee devaluation,” said the SAPM.

“Capacity payment deduction still exists despite assurances given in the past; as a result these power plants are being penalised for not operating at full capacity.”

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