Islamabad, April 16 (IANS) Pakistan has requested China for ease in payment obligations of over $30 billion worth of about 12,000-megawatt power projects under the multi-billion dollar China-Pakistan Economic Corridor (CPEC) to minimise its financial and economic difficulties, a media report said.
This is part of the ongoing government efforts to secure discounts and savings on power purchases from independent power producers (IPPs) as circular debt liabilities cross 2 trillion PKR.
A cabinet member told Dawn news on Wednesday that Pakistan had formally taken up its difficulties with China for relief in power purchase prices at the highest level during the visit of President Arif Alvi to Beijing last month, as Islamabad’s capacity payments alone were estimated to be closer to 600 billion PKR this year.
According to Prime Minister Imran Khan, the capacity payments could go beyond 1.5 trillion PKR in a few years, which would be beyond repayment capacity of the people.
The cabinet member told Dawn news that the Chinese leadership had advised the National Development and Reforms Commission (NDRC) of China to discuss the matter with the financial institutions (mostly owned by the government).
However, Pakistan has requested two basic relaxations in the existing agreements given the emerging challenges amid the economic meltdown across the world in the wake of the coronavirus pandemic.
Of the two, one includes that Pakistan has sought an extension in debt repayment period in the tariff to 20 years from the existing repayment period of 10 years.
Meanwhile, Chinese Ambassador to Pakistan Yao Jing met Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh on Tuesday.
“Pakistan looks forward to Chinese support in dealing with this unprecedented situation arising out of this pandemic,” an official statement quoted Shaikh as telling the ambassador.
CPEC is a flagship $60 billion project of Chinese President Xi Jinping’s Belt and Road Initiative that aims to connect Asia, Africa and Europe through a vast network of highways, rail lines and sea lanes.
The multi-billion dollar corridor connects the Chinese city of Kashgar with Pakistan’s Gwadar port on the Arabian Sea.