Next month, the government will pay CPEC power companies 300 billion rupees.

In July, when the Chinese Foreign Minister visited, the Pakistani government resolved to pay the Rs. 300 billion in unpaid debts owed to Chinese independent power producers (IPPs).

China’s Charge d’Affaires recently brought up the matter with SAPM on Coordination, Syed Tariq Fatemi, who subsequently wrote to the power division to inquire about the payments. The outstanding payments, according to Chinese power companies, have reached $1.5 billion.

With their power plants in Hub, Sahiwal, and Port Qasim complaining about currency exchange limitations that make it impossible to import coal, Chinese businessmen are quite concerned about the situation. Companies say that the failure to pay could lead to the plants going into default and halting operations. On the other hand, Pakistan has a distinct plan to resolve the problem of capacity payments over time.

Pakistan has proposed to sell China 1200 MW of electricity to serve Afghanistan later. The government has also asked for the contracts with other IPPs to be renegotiated, which is expected to result in savings of $14.26 billion over the course of these plants, or $0.48 billion year for a project’s average 30-year lifespan.

The existing power balance predicts that Pakistan will have a surplus of 3970 MW by 2030, but the renegotiation may compromise the integrity of agreements made as part of CPEC, especially if the Chinese discover that the requests will truly come from Western financial institutions.

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