Govt striving to clear $2bn Chinese IPPs dues

ISLAMABAD: With payables touching almost Rs550 billion ($1.98bn), the government is contemplating finalising a schedule of payments to Chinese Independent Power Producers (IPPs) before convening the 13th Joint Coordination Committee (JCC) of the China-Pakistan Economic Corridor. This will be followed by Prime Minister Shehbaz Sharif’s visit to Beijing, expected in the first week of June.

Informed sources told Dawn that the Chinese side had this time insisted Prime Minister Sharif’s visit should follow the 13th JCC so that outstanding issues are settled and the roadmap for cooperation under CPEC-2 is finalised during the high-profile state-level meeting. While the PM visit is targeted for the first week of June, the JCC meeting has yet to be scheduled because of pending issues.

These sources said the Pakistani side’s entire focus, particularly led by Planning Minister Ahsan Iqbal, who is also co-chair of the JCC with his Chinese counterpart, was to resolve all pending issues, especially those relating to scaling down outstanding dues to Chinese IPPs and setting in motion future timely payments, including those committed under the revolving fund.

These sources said that the Chinese power dues were close to Rs550bn, and even timely payments under the revolving fund had been disturbed over the past few months.

An official told Dawn that the Chinese financial institutions thus required a comfort zone to extend further cooperation in critical projects for which confidence-building measures were urgently needed.

These non-payments and the Chinese demand for special energy tariffs for SEZs have hampered some of the major projects and investments in special economic zones (SEZs).

In this regard, Mr Iqbal has been holding back-to-back meetings with the ministries and agencies concerned over the past few weeks and held two high-profile sessions on Tuesday — one with around three dozen Chinese business representatives and another with the ministries and agencies.

He presided over first meeting of the Cabinet Committee on Chinese Investment Projects (CCoCIP) on Tuesday. “The meeting deliberated on the overdue issues concerning the CPEC-IPPs, which pose a significant impediment to the financial closure of key projects”, said an official statement quoting the minister as asking the “the IPPs to submit the amounts due to them in the context of CPEC energy projects as soon as possible”.

The minister emphasised the “importance of providing electricity to SEZs at an incentivised cost while ensuring the government does not incur losses”. He directed the involvement of the Board of Directors of the power firms, particularly the National Transmission and Dispatch Company, to expedite the resolution of SEZ-related issues.

Separately, the minister also held a detailed session with 35 Chinese enterprises and Pakistani business houses to solicit input and proposals on enhancing bilateral cooperation and realising mutual opportunities.

He said the 2nd phase of CPEC emphasises industrial cooperation and business-to-business partnerships, building upon the groundwork laid in the initial phase.

Published in Dawn, May 1st, 2024