CPEC power plants await $1.72 billion in overdue payments

Chinese Independent Power Producers (IPPs) under the China-Pakistan Economic Corridor (CPEC) framework are still waiting on overdue payments, which have now accumulated to Rs 500 billion ($1.72 billion). 

According to a report by Business Recorder, the Central Power Purchasing Agency-Guaranteed (CPPA-G) owes Rs 450 billion ($1.5 billion) of this total, but has been unable to make the payments due to ongoing financial difficulties and foreign exchange issues.

Several CEOs of Chinese coal-fired and wind power plants, including Port Qasim, China Hub, and Sahiwal, have raised concerns about the delay in payments and have repeatedly written to authorities requesting the clearance of dues. However, these requests have reportedly gone unanswered or received unsatisfactory responses.

Similarly, the National Grid Company (formerly NTDC) has failed to settle overdue payments owed to the 660 MW Pak Matiari-Lahore Transmission Company (PMLTC). 

In a recent letter to the National Grid Company’s Managing Director, PMLTC President and CEO Xiong Feng highlighted that the legally binding Transmission Services Agreement (TSA), signed in May 2018, requires payments to be made within 30 days of receiving invoices. Despite these clear terms, invoices dating back to December 2024 remain unpaid, and additional invoices for the first five months of 2025 are also overdue.

PMLTC’s total receivables from the National Grid Company under the TSA have now increased to Rs 55.071 billion, with Rs 47.076 billion of that amount being overdue. The company has emphasized the critical need for timely payments to avoid disruptions in the operation of the High Voltage Direct Current (HVDC) project.

Xiong Feng further noted that the delays have caused financial losses and other operational issues for PMLTC. The letter urged the National Grid Company and CPPA-G to expedite payments and prevent further losses.

Sources indicate that the Government of Pakistan may release some payments to Chinese IPPs in time for Prime Minister Shehbaz Sharif’s planned visit to China in late 2025. 

In the interim, Rs 5 billion has been disbursed to the Chinese IPPs through an Escrow Account, following negotiations between the Chinese stakeholders and the government.