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Print Print 2024-09-06

Capacity tariff of Chinese IPPs: China appears unwilling to renegotiate?

  • Addressing APNS gathering, Chinese Ambassador to Pakistan Jiang Zaidong says IPPs helped resolve power issues in Pakistan
Published September 6, 2024
Photo: APP
Photo: APP

KARACHI: China appears unwilling to renegotiate agreements of the capacity tariff of Chinese Independent Power Producers (IPPs) as Chinese ambassador to Pakistan Jiang Zaidong said it was a universal arrangement and Pakistan has delayed payment of $1billion.

Addressing at the All Pakistan Newspapers Society (APNS), Chinese Ambassador to Pakistan Jiang Zaidong shed light on the current state of China-Pakistan economic relations, particularly focusing on issues surrounding Chinese IPPs in Pakistan and the broader scope of the China-Pakistan Economic Corridor (CPEC).

Quoting Chinese saying: “When we drink water, we should not forget the real digger,” he said that IPPs resolved power issues in Pakistan and now there was no load shedding in Karachi.

PQEPC exploring options to resolve its financial woes

At that time, Pakistan’ power generate gap exceeded 5000KW and now after 11 years, Pakistan’s installed capacity is 45000MW and CPEC IPPs’ installed capacity has reached 8220MW, he informed.

Addressing recent media discussions on IPPs and China-Pakistan cooperation, Ambassador Jiang cautioned against disinformation that might affect ongoing discussions between the two countries. He urged for “solutions and encouragements” to maintain the strength of bilateral relations.

“It is not convenient to disclose everything in public but we are continuously providing SAFE deposit to Pakistan.”

Jiang Zaidong said Pakistan had promised to pay the capacity tariff to the Chinese IPPs and the capacity tariff was a universal arrangement made by Pakistani government to develop its power sector.

Furthermore, he said the Chinese investors had invested $5.5 billion in power sector and so far Pakistan had delayed payment of $1billion.

“Two Chinese power plants have been operational for seven years, with dividends now maturing in US dollars.”

Despite these challenges, Ambassador Jiang stressed the importance of finding systematic solutions rather than resorting to blame. He expressed personal interest in resolving these issues, stating, “I am personally interested to resolve this issue and during my vacation back in China, I will try to find my personal friends to find solutions.”

The ambassador reaffirmed China’s commitment to CPEC, describing it as a “game changer” for Pakistan. He highlighted that Chinese IPPs had significantly contributed to Pakistan’s power generation capacity, accounting for 18.2 percent of the country’s total installed capacity.

Looking ahead, the ambassador spoke about China’s plans for advanced modernization, which he believes will support Pakistan’s development. He mentioned six initiatives proposed by President Xi Jinping at the Beijing Summit Forum, stating that those initiatives applied to the process of joint cooperation with Pakistan in advanced modernisation.

Ambassador Jiang also expressed interest in expanding cooperation in agriculture and mining sectors, where Pakistan enjoys export advantages. He mentioned ongoing discussions to cultivate Pakistani talents in the IT sector and plans to offer advanced training to 1,000 Pakistani agriculture experts.

The ambassador emphasised the importance of security for Chinese developments in Pakistan and expressed gratitude to the Pakistani government and armed forces for their efforts to protect Chinese nationals.

“I am very confident that China’s developments in Pakistan will strengthen the friendship of both countries. China will unwaveringly support Pakistan in bigger role.”

He said that 74 percent of the Pakistan’s loans were from Western countries and financial institutions, however, china’s loan to Pakistan was conducive to the country’s development hence they were very clear and insisting on that CPEC was a game changer for Pakistan and would change its destiny.

“Our bilateral practical cooperation and our exchanges of state governance experience and second phase of CPEC will help Pakistan to achieve the advanced modernization.”

Chinese ambassador believed that China’s belt and road initiatives and the importance of CPEC would remain unchanged despite certain difficulties in CPEC construction projects; adding the cooperation in energy and constructions under CPEC was still a right decision as it enabled Pakistan to have solid foundation for advanced development.

He said they were trying to open Khunjerab Pass, albeit there were some constraint elements that restrained our exchanges.

The event encompassed more than just economic discussions. Dawn Media Group CEO Hameed Haroon offered insights into Chinese heritage and culture, broadening the dialogue beyond current affairs.

Copyright Business Recorder, 2024

Comments

Comments are closed.

KU Sep 06, 2024 12:11pm
Chinese point of view was enlightening, not read in our media usually. But what about our very own home-grown owners of IPPs? Are they most-preferred to most-necessary economic recovery of Pakistan?
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Ali Haider Sep 06, 2024 01:20pm
@Anonymous , You are not an artist because you have no respect for art.
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test Sep 06, 2024 01:27pm
China is our brother but chinese lack courage to lead the world i mean still using dollar ? “Two Chinese power plants have been operational for seven years, with dividends now maturing in US dollars.”
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test1 Sep 06, 2024 01:34pm
My advise would be if the payments are settled in yuan we can go for a currency swap with China otherwise these IPPs are very costly for the economy we must shut down these and instead use local coal.
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Mumtaz Malik Sep 06, 2024 04:00pm
China is on the right path, as it helped Pakistan when the USA ignored us. Additionally, China's technology is the most affordable. We must remember that if we have a strong friendship,
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Mumtaz Malik Sep 06, 2024 04:01pm
We must remember that if we have a strong friendship, we should honor and respect it.
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Mumtaz Malik Sep 06, 2024 04:01pm
If we break contracts with the IPPs (Independent Power Producers), they will take the matter to international courts, and Pakistan will face such massive fines that even if we sold ourselves,
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Mumtaz Malik Sep 06, 2024 04:02pm
We wouldn’t be able to pay them off. Additionally, the entire country would be left without electricity. Is the nation prepared for that?
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Mumtaz Malik Sep 06, 2024 04:07pm
The second solution is to somehow keep the industry running. This would utilize all the electricity, reducing capacity charges. Alongside, we should reduce electricity theft and line losses,
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Mumtaz Malik Sep 06, 2024 04:08pm
And formulate a solid energy policy that no future government can tamper with. This is how the issue will be resolved. Protests, however, are not the solution to this problem.
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Mumtaz Malik Sep 06, 2024 04:08pm
We now have to make a decision: either we live without electricity or we buy expensive electricity. We have no other options. If anyone has a better solution, they should step forward.
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mahboob elahi Sep 06, 2024 09:23pm
IPP FINANCING through ODIOUS DEBTS/LENDING....over invoicing of plants and other build ups ?
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ali Sep 07, 2024 02:48am
china in their own country are installing solar and wind while in pakistan coal power plants running on IMPORTED fuel
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