Unpaid bills for CPEC power projects surge to $1.8bn

Pakistan's unpaid bills for the China-Pakistan Economic Corridor (CPEC) power projects have escalated to Rs493 billion ($1.8 billion), marking a 77% increase over seven months. 

The rise in debt to Chinese power generation and transmission projects is attributed to the Power Division's inability to pay at least 90% of monthly claims. In June, power plants claimed Rs110 billion, but only Rs60 billion (53%) was settled.

China has conditioned the approval of a new $600 million loan on Pakistan settling its existing debts to Chinese power plants, a move indicating displeasure and a rare stipulation for loan approval. 

Despite efforts, including a request for loans from the Industrial and Commercial Bank of China and the Bank of China, and the establishment of a Pakistan Energy Revolving Account (PERA) with Rs48 billion, debts remain high. 

Monthly allocations of Rs4 billion are insufficient to cover the dues, exacerbating the problem.

The issue has been raised by the Chinese government through diplomatic channels, and the lack of insurance coverage from Sinosure for new projects due to outstanding payments has further complicated the situation. 

The International Monetary Fund (IMF) has also not approved Pakistan's circular debt reduction plan, highlighting the serious fiscal risks involved.