ISLAMABAD: In a fresh blow to Pakistan’s already strained power sector, the Port Qasim Electric Power Company (PQEPC) has warned the government of a possible suspension of plant operations due to the Central Power Purchasing Agency-Guarantee’s continued failure to meet financial obligations under the Power Purchase Agreement (PPA), well-placed sources told Business Recorder.
The warning came in a letter from PQEPC Chief Executive Officer Wang Dongfeng, addressed to Minister for Power Awais Leghari, Finance Minister Muhammad Aurangzeb, Planning Minister Ahsan Iqbal, and the Chairman of the China-Pakistan Economic Corridor (CPEC) Authority. A copy of the letter is available with Business Recorder.
Dongfeng stated that under the government’s guidance, the 1,320 MW Port Qasim coal-fired power plant—one of the flagship energy projects under CPEC—has consistently delivered clean, reliable, and cost-effective electricity to the national grid.
Payments to Chinese IPPs: PQEPC seeks help of Aurangzeb
While acknowledging the government and CPPA-G’s efforts in arranging funds and making partial payments to Independent Power Producers (IPPs), Dongfeng stressed that the total outstanding dues to PQEPC have surged to Rs75.5 billion as of October 6, 2025. The payment delay now exceeds six months, with no signs of resolution.
“The project shareholders and sponsors from China and Qatar have expressed serious dissatisfaction and requested the government to urgently take necessary steps to reduce the outstanding amount. We hereby notify that the current dues entitle PQEPC to suspend plant operations in accordance with Section 9.10 of the PPA, without any liquidated damages,” Dongfeng wrote.
He further emphasized that PQEPC’s Energy Purchase Price (EPP) tariff remains lower than that of Residual Fuel Oil (RFO)- and RLNG-based power plants.
“A project suspension would be a lose-lose situation that all parties must work to avoid. Timely settlement of the dues is critical to ensuring sustainable power generation and preventing defaults under loan agreements and Pakistan’s sovereign guarantees,” sources quoted Dongfeng as warning top government officials. He urged the authorities to provide financial support to CPPA-G so it can clear the mounting arrears as soon as possible.
In late August 2025, the government released Rs100 billion to approximately 16 Chinese CPEC power projects—including coal-fired plants—ahead of Prime Minister Shehbaz Sharif’s visit to China. The payment was made despite Pakistan’s ongoing fiscal constraints. However, Chinese CPEC IPPs continue to demand the clearance of remaining dues, which reportedly still total around Rs300 billion.
The government’s team, which previously renegotiated contracts with local IPPs and government-owned power producers (GPPs), is now formulating a mechanism to request Chinese IPPs to waive the Late Payment Surcharge (LPS) before disbursing payments from a newly arranged Rs1.225 trillion facility secured from 18 banks.
Disbursement of these funds is expected to take three to four months. However, senior officials from Chinese CPEC IPPs argue that the issue of LPS waivers should be addressed directly with Beijing, which has the authority to approve such concessions.
Copyright Business Recorder, 2025