Pak requests China to ease payment obligations in CPEC power projects

Cash-strapped Pakistan has requested China to ease the payment obligations of over USD 30 billion in the power projects under the China-Pakistan Economic Corridor (CPEC) to minimise its financial and economic difficulties.

The CPEC is a planned network of roads, railways and energy projects linking China's resource-rich Xinjiang Uyghur Autonomous Region with Pakistan's strategic Gwadar Port on the Arabian Sea.

The CPEC was launched in 2015 when Chinese President Xi Jinping visited Pakistan and it now envisages investment of over USD 50 billion in different projects under construction in Pakistan.

According to a report in the Dawn newspaper on Thursday, Pakistan's request for relaxation in payments is part of its ongoing efforts to secure discounts and savings on power purchases from independent power producers as its circular debt liabilities crossed Rs 2 trillion (over USD 11 billion).

A Cabinet member, on the basis of anonymity, said the Chinese leadership had advised the National Development and Reforms Commission (NDRC) of China to discuss the matter with the financial institutions (mostly owned by the government).

He said the matter could move forward under the aegis of the CPEC's Joint Working Group (JWG) on Energy before taking a clear shape.

The member said that Pakistan had formally taken up the issue with China during the recent visit of President Arif Alvi to Beijing, as Pakistan's capacity payments alone were estimated to be closer to Rs 600 billion (USD 3.5 billion) this year.

Foreign Minister Shah Mehmood Qureshi and Minister for Planning, Development and Special Initiatives Asad Umar, who also heads the Cabinet Committee on Energy, were part of the presidential delegation to China on March 17.

According to Prime Minister Imran Khan, the capacity payments could go beyond Rs 1.5 trillion in a few years, which would be beyond the repayment capacity of the people.

Meanwhile, Chinese Ambassador to Pakistan Yao Jing met Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh on Tuesday.

Pakistan looks forward to Chinese support in dealing with this unprecedented situation arising out of this (COVID-19) pandemic, an official statement quoted Shaikh as saying.

The finance adviser also discussed with the Chinese ambassador the effect of the pandemic on the overall growth of Pakistan economy as exports and remittances will suffer as economies around the world enter recession.