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China Power Firms Warn Pakistan of Shutdown Over Debts

The group of Chinese power companies said Pakistani authorities were pressuring them to maximise generation to meet peak summer needs

Chinese power companies concerned over unpaid debts in Pakistan met with Pakistan's minister of planning and development Ahsan Iqbal, seen here.
Ahsan Iqbal, Pakistan's Minister of Planning and Development, speaks at the launch of the China-Pakistan Economic Corridor (CPEC) in 2017. Photo: Reuters.


More than two dozen Chinese power generation companies operating in Pakistan have told the government they would be forced to shut down their plants this month unless $1.56 billion in overdue payments were forthcoming, according to local media reports.

The independent power producers (IPPs) told Pakistan’s Minister for Planning and Development Ahsan Iqbal that authorities were pressuring them to maximise generation to meet peak summer needs, but that was impossible given serious liquidity issues, Dawn reported.

More than 30 Chinese companies operate in the South Asian country under the flagship multi-billion-dollar China-Pakistan Economic Corridor (CPEC) in energy, communication, railways and others areas.

The recently appointed coalition government in Pakistan is regarded as more China-friendly than the previous administration of the ousted prime minister Imran Khan.

Beijing recently rolled over Pakistan’s estimated $4.2 billion debt, but some scholars have argued that CPEC is a debt trap, while other experts have said it is an opportunity for Islamabad.

However, the meeting with Iqbal brought forth a litany of complaints, including about complex visa procedures for Chinese executives and tax issues, Dawn said.

One major issue was rising fuel costs as the price of coal had tripled or quadrupled, they told Iqbal in the three-hour meeting, according to Dawn.

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Some Issues Unsettled

The paper said the Chinese executives had also raised concerns over Pakistan’s draft renewable energy policy that requires international competitive bidding.

Dawn said Pakistani businesses attending the meeting also had complaints. Tauseef Farooqi, chairman of the National Electric Power Regulatory Authority (Nepra), reportedly told Chinese IPPs to put their own house in order, Dawn said.

He complained that Nepra’s letters to the Chinese remained unanswered for a long time, and unless regulatory requirements were addressed some of the issues would remain unsettled.

“The key objective is to listen to problems of Chinese companies working in CPEC directly and to resolve the issues immediately without any further delay,” Iqbal said in a statement after the meeting.

“CPEC has to be implemented in spirit of teamwork as both China and Pakistan are iron brothers and all parties have to sit together and to resolve all the pending problems in the same spirit to make the CPEC project successful,” he added.

Iqbal said he had directed the Ministry of Interior, Board of Investment and Ministry of Foreign Affairs to devise a mechanism to resolve the visa issues, saying he had asked for a “soft visa policy” for chief executives of large companies.

Earlier, Iqbal told Pang Chunxue, chargé d’affaires at the Chinese embassy in Islamabad: “My top priority is to expedite the CPEC projects to restore the confidence of the Chinese investors.”


• George Russell




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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.


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