Payments issue with CPPA-G: Shanghai Electric lodges complaint with PM

ISLAMABAD: Chinese power firm Shanghai Electric has reportedly lodged a complaint against Central Power Purchasing Agency-Guaranteed (CPPA-G) to the Prime Minister for not making payments on time, well-informed sources told Business Recorder.

Sharing the details, sources said M/s Thar Coal Block-1 Power Generation Company Pvt Ltd has informed Special Investment Facilitation Council (SIFC) that the company has achieved Commercial Operation Date (COD) on February 5, 2023, however it is facing severe cash flow issues due to inefficient payments from CPPA-G.

“Since we have achieved COD on February5, 2023, we are facing severe cash flow issues due to inefficient payment from CPPA-G as compared to other CPEC energy projects whose average recovery rates are around 85 per cent.

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Our tariff payment recovery rate is far below average level i.e. only 67 per cent, resulting in a total overdue amount of over Rs 74 billion which is collectively a huge amount for only one-year time,“ said Zhang Xin of Marketing Department of the Company in a communication with Secretary SIFC, Jameel Qureshi.

M/s Thar Coal Block-1 Power Generation Company argued that as a result of delay in due payment by the CPPA-G, the company’s cash flow has severe adverse impact on its project’s normal operations.

Chinese company further stated that considering its power plant’s significant performance of highest electricity generation and advantages of Economic Merit Order (EMO) ranking last year, it requested CPPA-G to give the highest priority to the project and make special arrangement to allocate more funds to release the burden of huge overdue balance.

According to sources, SIFC has advised CPPA-G to settle the matter amicably as per rules and procedures.

On April 17, 2024, a delegation of Shanghai Al-Krak Group led by Wu Lei, chairman of Shanghai Al-Krak Group met Prime Minister Shehbaz Sharif has raised the issue of delay in payments by the CPPA-G.

The sources said, Prime Minister directed that arrangements be made to clear due amount of the company as per the pact.

PM also invited the Shanghai Electric Group to invest in shifting imported coal-based power plants in Pakistan to local coal and for further expanding coal mining projects and also invited the Shanghai Electric Group to invest in shifting imported coal-based power plants in Pakistan to local coal and for further expanding coal mining projects.

The Prime Minister reiterated Pakistan’s determination to further promote friendly relations and economic cooperation with China.

He said that the government of Pakistan will provide all facilities to Chinese investors to further expand the existing projects.

Copyright Business Recorder, 2024