ISLAMABAD: Foreign investors are said to be mounting pressure on dollar-starved Islamabad for remitting dividends to their shareholders especially those who had invested in power plants established under the China-Pakistan Economic Corridor (CPEC, well-informed sources told Business Recorder.
The outstanding dues of CPEC power projects are about Rs 550 billion and this was the key issue discussed during recent visits of Ishaq Dar, Deputy Prime Minister/ Foreign Minister and Ashan Iqbal, Federal Minister for Planning, Development and Special Initiatives, who is also incharge of CPEC project, to Beijing.
Private Power Infrastructure Board (PPIB has repeatedly raised this with State Bank of Pakistan (SBP), which is helpless due to dearth of dollars.
Apr FDI inflow up 172pc to $358.84m YoY
Recent example of such pressure is a letter from Qatar’s ruling family which is owner of 49 per cent shares of imported coal power project at Port Qasim.
The sources said, Prime Minister, Shehbaz Sharif has received a letter from former Prime Minister of Qatar, Sheikh Hamad Bin Jasim Bin Jaber Al Thani for payment of $450 million dollars as receivables of Port Qasim Electric Power Company (PQEPC), which established 1320-MW imported coal power plant at Port Qasim.
Sheikh Hamad Bin Jasim Bin Jaber Al Thani is the same dignitary who wrote letters in favour of former Prime Minister Nawaz Sharif during his Panama Gate case hearing at the Supreme Court of Pakistan in 2017.
“I am writing to you for assistance in resolving issues related to the Port Qasim Power project. We have a joint venture with Power China where we own 49% of the project.
The project was set up under the CPEC Program when Mian Nawaz Sharif was the Prime Minster of Pakistan. As you may be aware, even though the project has been highly successful and generated significant amount ($ 810 million since inception), we have not received a single dollar of dividend. This is primarily because of the delay in the payment of receivables which currently stand at $558 million.
We would greatly appreciate your intervention to help in payment of these receivables particularly the past due amounts of $ 450 million,“ Al Thani said in a letter to Prime Minister Shehbaz Sharif last month, which has now been shared with Finance Ministry and other concerned authorities.
Recently, PQEPC had asked the government to clear its due payments to avoid constitution of loan agreement default and GoP Sovereign Guarantee Default.
In a letter to caretaker Finance Minister, power company’s CEO, Guo Guangling stated that under the guidance of the Government of Pakistan, the 1320-MW Port Qasim coal-fired power project, acting as a leading energy project under CPEC, has continuously provided the most clean, reliable and economical electricity to the national grid, and endeavoured our efforts in controlling the Circular Debt throughout the outbreak of Covid-I9 pandemic.“
The company had highlighted that Settlement Agreement for resolving the CPP deduction issue due to non-availability of foreign exchange has been initialled by both parties. Following the official signing of the agreement, the amount will increase to Rs. 13.6 billion.
In this case, the project shareholders/ sponsors from China and Qatar expressed significant discontent and requested taking immediate all necessary measures to reduce the outstanding amount.
The company has notified that current due amount entitles PQEPC to proceed to suspend the plant operation according to PPA Section 9.10 without any Liquidated Damages (LDs).
PQEPC has comparative advantage on the EPP tariff as compared with other oil and RLNG power plants. In this regard, project suspension will be a ‘lose-lose situation’ that both sides jointly are making efforts to avoid. Therefore, timely settlement of due amount of the project is imminently required to ensure the sustainable power generation and avoid constitution of loan agreement default and GoP Sovereign Guarantee Default .
The source said, Special Assistant to the Prime Minister, Syed Tariq Fatemi, through a letter has asked all the concerned Ministries to resolve the issue expeditiously.
Prime Minister has directed that this matter may be given the highest priority by the Power Ministry, which should, with the help and assistance of other concerned organisations, resolve the matter expeditiously, especially in view of our close brotherly ties with the State of Qatar,“ Fatemi added.
However, at a recent meeting at the Board of Investment (BoI), Additional Director (SBP) Muhammad Tahir noted that there were some restrictions and limitations owing to foreign exchange reserve position. Now the situation has improved, and backlog of dividend repatriations are being cleared. Similarly, debt obligations have also been made as per schedule by the SBP.
He also mentioned that SBP has developed a queue process for repatriations of dividend by the companies. As per the turn of these companies, repatriation of funds is allowed, accordingly. He also pointed out that the Local Deployment Policy is also in place in case of repatriation of a large amount by the company.
As per Policy, the company is allowed to deploy the dividend and earn interest/ profit on it rather than being left idle in their accounts. Both can also be repatriated as foreign exchange reserves improve.
Copyright Business Recorder, 2024
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