Rs431bn owed to Chinese power projects: PD and SBP at odds over repatriation?

ISLAMABAD: The Power Division and the State Bank of Pakistan (SBP) are reportedly at odds over the repatriation of Rs 431 billion owed to Chinese power sector projects—an amount meant to be repatriated through commercial banks, well-informed sources told Business Recorder.

This issue came to light during a meeting of the Sub-Committee on Reforms, chaired by Minister for Petroleum and Natural Resources Ali Pervaiz Malik. The meeting was also attended by Special Assistant to the Prime Minister on Industries and Production, Haroon Akhtar.

Chinese coal-fired power projects, such as Port Qasim and Sahiwal, have been persistently writing to the Ministry of Finance, seeking clearance of these outstanding payments.

Chinese IPPs face Rs500bn in unpaid dues

The matter surfaced during discussions on proposed measures to mitigate currency risks for foreign investors in Pakistan.

The SBP stated that no loan repayments—whether principal or interest—nor profit repatriation payments are pending with the SBP or any commercial bank. The central bank acknowledged that only a profit payment of $26.5 million is pending with one commercial bank, which it expects will be cleared soon. SBP further clarified that no verbal or written directives had been issued to commercial banks to delay LC payments or other financial transactions.

However, the Power Division reported that while the power payment cycle typically spans 90 days, Rs 431 billion in payments remain stuck with commercial banks—primarily for non-energy components.

A detailed ageing report presented during the meeting indicated that while no energy payments have been overdue for more than three months, non-energy payments have been pending for years. The depreciation of the rupee has further reduced the dollar value of these payments.

No representatives from NEPRA attended the meeting, and no information was shared regarding eight pending cases.

The SBP reiterated that no Chinese company payments are currently pending for profit repatriation or debt servicing, and it has issued no instructions—verbal or written—to banks in this context. However, the SBP was asked to provide a written report detailing all payments to Chinese companies pending with commercial banks, including ageing data.

The Power Division maintained its stance that Rs 431 billion in payments are pending with various banks and remain un-repatriated by the concerned Chinese companies.

NEPRA was directed to provide an update on the potential claw back of the eight cases under adjudication. No conclusive way forward was proposed during the session.

The committee noted a divergence in views between the SBP and the Power Division, making it difficult to issue a clear recommendation due to the lack of clarity. The chair emphasized several core principles as essential for attracting investment: (i) adherence to due process of law ;(ii) sanctity and enforceability of contracts;(iii) provision of adequate security measures ;(iv) a competitive and transparent process, and (v) policy consistency and predictability in the medium term.

Regarding the development of physical infrastructure and utility services at Special Economic Zones (SEZs) and Export Processing Zones (EPZs), the Board of Investment (BoI) informed the sub-committee that six SEZs will be marketed to Chinese investors. BoI said that 40 companies have been identified to showcase as success stories, which will be narrowed down to 5–10 for targeted promotion.

The committee supported promoting six SEZs—AIIC, BQIP, KIP, Rashakai, Dhabeji, and PSM—to Chinese investors. Of these, 3,000 acres are available for development at PSM and 700 acres at AIIC, with additional land parcels available at other developed SEZs, all equipped with basic amenities.

The committee recommended establishing Service Level Agreements (SLAs) to define timelines.

On easing regulatory hurdles and creating a one-stop-shop mechanism integrating federal and provincial authorities, the BoI presented updates on its Business Facilitation Center (BFC) initiative. BoI highlighted the “regulatory guillotine” efforts and modernization of the Companies Act. The Cabinet Committee on Regulatory Reforms (CCoRR) has been notified, and BoI claims that two reform packages will reduce the cost of doing business by Rs 250 billion. Three additional reform packages are in the pipeline for CCoRR approval.

BoI also shared its role in integrating 20 departments with SECP, harmonizing food standards across federal and provincial jurisdictions, and reducing DRAP’s medical device registration timeline from two years to 45 days.

The committee recommended that BoI implement a hub-and-spoke model for BFCs linked to regional offices in the six priority SEZs. SLAs will also be developed for these centers to provide transparency and predictability for investors.

On reducing port clearance times and enhancing cold chain logistics, the Secretary of the Ministry of Maritime Affairs (MoMA), along with the Chairman of Port Qasim Authority (PQA) and the General Manager (Operations) of Karachi Port Trust (KPT), briefed the committee.

They reported that recent reforms have reduced consignment clearance time by 24–48 hours. However, no precise data was available on reefer (refrigerated container) occupancy or costs.

It was also noted that 35–40% of consignments are routed through yellow or red channels, and various departments at ports impact both import and export processes.

The chair inquired whether consignments of vetted and established investors could be moved to the green channel.

The committee recommended developing a comprehensive port governance model that ensures one-window operations and standard procedures for cold chain storage, aligned with international best practices. SLAs should also be signed with investors to guarantee faster clearance of their consignments. Pre-clearance mechanisms and a grievance redressal help desk for reputable importers were also advised.

Lastly, the chair took serious notice of the long-vacant post of Chairman KPT and directed the Secretary of MoMA to resolve the matter urgently. A “look-after” charge must also be assigned without delay.

Copyright Business Recorder, 2025