ISLAMABAD: Chinese power projects have, once again, refused to renegotiate Power Purchase Agreements (PPAs) with the Government of Pakistan, a longstanding wish of dollar-hungry Islamabad.

The government has to clear about Rs 350 billion of Chinese power projects dues which is why Chinese state-owned insurance company, Sinosure, is reluctant to extend insurance coverage to any new power project.

M/s Sinosure has also sent a “displeasure” letter to Islamabad after the strong rumour doing the rounds in Islamabad that the government is urging Chinese IPPs to renegotiate “expensive PPAs.”

CPEC power plants: Sinosure demands govt make payments

M/s Sinosure is a state-owned policy insurance company which resolutely implements the decisions and plans of the state, and plays a positive role in supporting joint efforts to advance “the Belt and Road Initiative” (BRI).

Last month, the Executive Committee of Special Investment Facilitation Council (SIFC), a facility established as a “single a facility to act as a single window” to facilitate investors, establish cooperation among all Government departments, and fast-track project development had directed Secretary Power Division to update and present recommendations on renegotiations of PPAs in the Executive Committee.

Power Division, sources said, has informally approached sponsors of Chinese power projects established under China Pakistan Economic Corridor (CPEC) framework, to renegotiate PPAs. However, GoP’s request has not been entrained.

“Chinese are not ready to renegotiate PPAs. As a matter of fact, now when we approach them for this purpose, they resent it,” the sources added.

Unconfirmed reports, however, suggest that a Committee is being constituted to deal with this issue.

According to sources, caretaker Prime Minister, Anwar-ul-Haq who is scheduled to visit China on 17-18 October, 2023 to attend the third BRI, has sought update status on payment to Chinese IPPs.

Prime Minister will draw attention of Chinese top brass to the exceptional rise in capacity payments because of near simultaneous arrival of new capacity from projects undertaken under CPEC, the sources added.

On October 10, 2023, Minister for Planning, Development and Special Initiatives held a meeting on CPEC energy projects in which the issues discussed included revolving account for CPEC IPPs, overdue payment for CPEC IPPs, Sinosure clearance for power projects, MoU on AMI, MoU on identification of potential sites for pump storage hydropower projects and MoU on development of renewable energy projects in Pakistan.

An insider told this scribe that the government is expected to make payment of Rs 8-12 billion to Chinese IPPs prior to visit of caretaker Prime Minister to China. The exact amount will be decided on arrival of Finance Ministry’s team from Morocco.

The sources said, during Imran Khan led government, Pakistan floated a proposal to Chinese government for renegotiation on contracts of power projects established under CPEC on the pattern of other IPPs or to purchase 1200-MW electricity from Pakistan for onward supply to Afghanistan.

According to initial estimates if the pacts with the CPEC IPPs are similarly re-negotiated, an initial working suggests that Pakistan can save $ 14.29 billion over the life of these projects which comes to an average of $0.48billion per year for average project life of 30 years.

Copyright Business Recorder, 2023

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Leo Oct 13, 2023 07:24am
shame on this ideas, What was the government doing when it extended the PPA of some old power plants??? that extended of PPA will increase so much capacity payment, in this tough time, why resign it? why agree it ?!
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Adi Oct 13, 2023 08:01am
Where are all those ‘Dollar trade is coming to end’ soothsayers? Very curious that China, which has ambitions for its own currency to be a global currency, is not willing to accept payments in RMB. It’s pretty clear that the Chinese manipulate the currency to keep exports cheap. To take payment in RMB directly will be a disadvantage to them. This is why I remain skeptical of efforts to call an end to the $ as the global trading currency. It’s value is fundamentally built on trust and the Chinese unwillingness to accept payments in any other currency is more revealing of them than any of their platitudes so far.
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Pakistani1 Oct 13, 2023 12:16pm
These are all commercial deals. There is no meaning to friendship being higher than Himalayas and deeper than seas.
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Pakistani1 Oct 13, 2023 12:16pm
Focus on Pakistani owned IPPS if the government is serious in achieving results.
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TidBit Oct 13, 2023 10:50pm
This blows the so called iron brother crap. they have not written off any loans, helped us with climate change, or reneg the Contracts. With brothers like this, we dont need enemies.
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Ghareeb Awam Oct 14, 2023 11:26am
Do not stretch the patience of foreign investors to an extent where they get irritated. SIFC which does nothing except for 'directing' so and so to submit recommendations is certainly over-enthusiastic and over-confident of its powers and thought that investments would flow in simply because a special body had been established. China is over-kind to Pakistan and has helped the country in ways the common man does not know, and might be kind this time too. However, investors have to see a lot before investing. Don't you and I think a hundred times and consider the pros and cons if we are to invest even a thousand rupees somewhere? The government of Pakistan must fulfil its financial commitments as agreed upon. After all we have not undertaken any austerity measures in these difficult times and 'mauj masti' continues with full speed.
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Tulukan Mairandi Oct 14, 2023 12:27pm
Iron brother zindabad.
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Tulukan Mairandi Oct 14, 2023 12:29pm
But isn't Pak China relationship deeper than ocean, higher than himalayas, and stronger than iron? Hmm. Perhaps it's also smellier than faeces.
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Khosha Oct 14, 2023 09:08pm
For Chinese business comes first than Iron brother!
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Bharath Oct 15, 2023 10:29am
All the blame is on ex-PM, Nawaz Sharif who has made the CPEC deal without studying. Pakistan should just nationalize the Power Plants and CPEC projects. There's a saying the PMLN government back then hasn't done any studies on the viability of CPEC projects in detail.
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Nashat Oct 15, 2023 10:55am
In.Pakistan, We have Never taken The Corrupt Negotiators to TASK, BECAUSE OF THEIR SELF INTERESTS, They SELL the Country, to others in the Name of Attracting Foreign Investors.
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