The government on Friday promised to start making payments to independent power producers (IPPs) who set up plants under the China-Pakistan Economic Corridor (CPEC) early next week and set a schedule for regular monthly payments for a full fiscal year to the satisfaction of Chinese investors.
Pakistan’s Central Power Purchasing Agency (CPPA) owes around Rs260 billion to Chinese IPPs on account of power purchases. The payables, which dropped from around Rs300bn to about Rs220bn by the close of last fiscal year, have surged again.
The government has assured the International Monetary Fund that it would seek discounts from IPPs on account of capacity payments through extension in debt servicing tenure from 10 years at present to 20 years and discounts in interest rates.
Presiding over a meeting of all stakeholders and chief executives of Chinese IPPs, Finance Minister Miftah Ismail directed the power division to ensure that at least funds required for fuel arrangements were arranged on top priority as the sponsors complained that their cash requirements for fuel, particularly coal, had increased manifold because of the global market and they were short of inventories.
The power division assured the meeting that they had been meeting financial requirements on account of debt payment and fuel in the past and would honour these commitments in future as well. A power division official said his understanding was that between Rs40bn and Rs50bn would be paid next week.
The meeting was also attended by Power Minister Khurram Dastgir, prime minister’s special assistants Dr Muhammad Jehanzeb Khan, Tariq Fatemi and Zafaruddin Mehmood, power secretary, CEOs of Chinese IPPs and officials of the finance and power divisions.
The meeting also constituted a committee comprising representatives of finance and power divisions and the CPEC Authority to hold regular fortnightly meetings with Chinese IPPs to hold to review all issues and address them in a timely manner.
The Chinese investors also agitated for the creation of a revolving fund for payment of at least 20pc of dues against debt servicing and fuel requirements on a monthly basis directly from the collection of bills by the power distribution companies.
The revolving fund, promised by Pakistan authorities to CPEC IPPs at the outset, could not be operationalised, sometimes leading bills to pile up because of non-payments for months.
An official statement said Friday’s meeting discussed the issue of outstanding payments to Chinese IPPs in Pakistan and other hurdles faced by them.
Finance Minister Ismail assured the investors that CPEC was a flagship project of friendship between Pakistan and China and expressed the resolve of the present government to provide all kinds of facilities to Chinese investors and promised to address their concerns immediately.
The finance minister also formed a committee comprising representatives from finance and power divisions and CPEC to hold meetings with Chinese IPPS regularly.
The CEOs of Chinese IPPs expressed their satisfaction over addressing and resolving their issues, the finance ministry said in a statement.