ISLAMABAD: M/s Pak Matiari-Lahore Transmission Company (Private) Limited (PMLTC) has approached the Chinese embassy in Islamabad for help against delay in payment of foreign exchange by State Bank of Pakistan (SBP) meant to pay Sinosure fee.
The Company’s CEO/ President, Zhang Lei, in a letter to Chinese embassy and concerned authorities of the government of Pakistan stated that in accordance with the requirement of Sinosure Policy and Facility Agreement of the project, PMLTC is obliged to make payment for Sinosure fee for fiscal year 2022-2023 amounting to $ 6.31 million by June 20, 2022.
PMLTC, in its letter written on June 24, 2022 stated that it has submitted a request to State Bank of Pakistan to seek approval for foreign exchange on May 9, 2022 through ICBC Karachi. However, after the lapse of more than one month the approval for foreign exchange was still under process in SBP and it remains pending to date.
According to the CEO of the company, in consideration of the sudden expected delay of the approval, which causes material breach of the Sinosure Policy, i.e., delay of payment for Sinosure fee, PMLTC is in a default position and may bring serious consequences as follows: (i) discontinuation of the Sinosure coverage for the project that leaves the project exposed to various risks, and (ii) causes material default under the Facility Agreement, and the Lender (CDB) may declare that all or part of the loans, together with accrued interest, and all other amounts accrued or outstanding under the finance documents be immediately due and payable, which will cause insolvency of PMLTC and lead to bankruptcy liquidation, and finally failure of this flagship project of CPEC.
Further, due to unavailability of foreign exchange, in accordance with Implementation Agreement (IA) between Government of Pakistan and PMLTC, the Government of Pakistan will also default under Section 10.4 of the IA.
The content of Section 10.4 of IA is reproduced as under: “upon application having been made by the Company in the Prescribed Form (such application having been made no less than 15 business days prior to the requested date for specified foreign currency), the GoP shall, on such requested date, make available to the Company through the State Bank of Pakistan, to the extent that specified foreign currency are not available through normal commercial banking channels, specified foreign currency in exchange for Rupees in the amount necessary for meeting the company’s requirements for specified foreign currency necessary to meet its obligations under this Agreement.”
“We cannot stress enough that these series of breach of the agreements will cause significant negative impact on the stable operation and sustainability of this project and the entire cooperation between Pakistan and China for CPEC,” Zhang Lei said adding that for the purpose to avoid such untoward situation, PMLTC requests immediate coordination with the concerned to make available the foreign exchange without further delay so that payment can be arranged to avoid further catastrophic results.
Copyright Business Recorder, 2022