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ISLAMABAD: As Prime Minister Shehbaz Sharif is leaving for China on a four-day (June 4-8) official visit on Tuesday (today), Chinese power generation and transmission companies have increased their pressure on the government to get maximum possible pending overdue amount, well-informed sources told Business Recorder.

Central Power Purchasing Agency– Guaranteed (CPPA-G) paid an amount of Rs 70 billion to Chinese IPPs a day earlier and intend to make another instalment soon along with other IPPs before June 30, 2024 as a substantial amount is being arranged from Karachi.

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 projects, to Beijing.

IPP payments, Gwadar power plant: MoFA asks PD to address Chinese concerns

According to Port Qasim Electric Power Company (private) Limited (PQEPC), its total due amount reached Rs 94.5 billion; i.e., $ 340 million till May 23, with a delay payment period of over 6 months which could escalate.

The company also wants to highlight that Settlement Agreement for resolving the Capacity Power Purchase (CPP) deduction issue due to non-availability of foreign exchange has been initiated by both parties. Following the official signing of the agreement, the amount will be increased by Rs 13.6 billion.

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 PQEPC, which established 1320-MW imported coal power plant at Port Qasim. Shanghai Electric, Thar Coal Block-1, Integrated Energy Project, in a letter to Governor State Bank of Pakistan has stated that it is critical for Thar Coal-1 Power Generation Company (Private Limited) to deposit $ 79 million in the Debt Service Account (DSRA) in accordance with the Term Facility Agreement (TFA) of January 19, 2020.

The Company further stated that it has comprehensively explained the position in its letter of May 10, 2024 in relation to the obligations of the Company to China Development Bank and other financiers, in respect of the facility of $ 1,364,000,000 availed by the company.

The power company argued that delaying this payment could result in penalties and higher costs which would impact its ability to avail a bridge loan, thereby negatively impacting on the financial stability of the project.

M/s Engro Thar has also written a letter maintaining that its outstanding dues from CPPA-G have surged to Rs 76 billion and requested CPPA-G to expedite the clearance of its overdue receivables and ensure the immediate payment of at least an additional Rs 15 billion. However, CPPA-G has paid 50 per cent of the demanded amount.

Another Chinese company, CHIC Pak Company Limited (Pvt.) limited, has expressed concerns regarding viability of the tariff determination of May 14, 2024 for 300-MW coal fired power plant at Gwadar.

M/s PMLTE (Pak- Matiari Lahore Transmission Company (Private) Limited, in a letter to Managing Director NTDC, has stated that despite the express terms and requirements, the Purchaser/ NTDC is currently still settling the payment for the invoice of November 2023, which has become overdue since January 02, 2024; in addition the invoices for December, 2023 and January/ February/ March/ April , 2024 are all outstanding, and as a result, the total outstanding amounts (inclusive of interest on delayed Payments) payable to PMLTC under the Transmission Services Agreement (TSA) to date have reached a staggering amount of Rs 56.6 billion (inclusive sales tax), out of which the amount of Rs 46,966 billion has become overdue.

President of Sinosure, a key state-owned insurance company of China which accords mandatory insurance approval to mega projects, reiterated concerns shared by other Chinese financial institutions and government officials.

Copyright Business Recorder, 2024

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Ch K A Nye Jun 05, 2024 10:08am
Debts, defaults and deferrals. Pretty much sums up the state of the Nation.
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ANK Jun 05, 2024 04:44pm
This is how Thugs like PPP & Nuras put the power sector at brinks of destruction. Their illconceived agreements & lust for money led to this nonsense situation & nation is paying the price of the same
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