Unpaid bills for CPEC power projects surge to $1.8bn

Outstanding payments to Chinese energy projects increased by 77% in seven months

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.

Monitoring Desk
Monitoring Desk
Our monitoring team diligently searches the vast expanse of the web to carefully handpick and distill top-tier business and economic news stories and articles, presenting them to you in a concise and informative manner.

3 COMMENTS

  1. IPP payments are our obligations. This is not the time who contracted such contracts with IPP’S or it was not in our favor. This is the time to pay it. China is not like America or any other European or lender from Muslim Country. Chinese want each and every penny of their loan returned. Otherwise Chinese will take any of our assets like port, mines.
    But the question is how to pay it. Link this payment with any of income stream. Second thing is don’t get ambitious with investments and so called prosperity. Investments with loans looks very rosy but it is trap. First recover our selves from crisis/ consolidate and then go for investments.
    It is very difficult to digest this idea as performance on political front also requires something( million houses, millions new jobs, free electricity and petrol to poor, heavy expenditures on defence for the defense of the country). All these things are very important but economic sovereignty is also matters. Everyone has his vested interest, who is going to balance it.

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