Pakistan: Chinese power producers threaten to shut down if dues worth Rs 300 bln not paid

Hundreds of Chinese power producers in Pakistan have stated they may be compelled to shut down their plants this month unless they receive Rs 300 billion in back payments. More than 30 Chinese businesses operating under the landmark multibillion-dollar China-Pakistan Economic Corridor (CPEC) brought up a slew of objections during a meeting presided over by Planning Minister Ahsan Iqbal on May 9, Pakistani news outlet Dawn reported.

According to Dawn, approximately 25 representatives from Chinese independent power producers (IPPs) spoke one after the other, complaining about the accumulation of their dues and warning that if they did not receive upfront payments, they would shut down within days. The IPPs claimed that the government was pressuring them to increase generation to meet peak summer demand, but "this is impossible for us in view of serious liquidity issues".

Complex immigration procedures for Chinese executives, as well as taxation, were among the criticisms made by Chinese corporations. The Pakistani side also expressed dissatisfaction with the slowness with which their communications were responded. They also expressed dissatisfaction with increased fuel prices, particularly for coal. They said that because the costs had increased by three to four times, they should be granted at least three to four times more liquidity to make fuel arrangements.

Pakistan power crisis

Inefficiencies, a growing cyclical debt, and a heavy reliance on imported fossil fuels have thrown Pakistan's energy sector into disarray. Pakistan has merged various energy-related ministries and agencies under a single ministry, but it has yet to formulate a comprehensive and integrated policy for assuring national energy security, resulting in an energy crisis.

Payments for power that has already been consumed have not been made, according to the power producers. They claimed that the COVID-19 pandemic has left them financially crippled and that the tax authorities have begun taxing them at higher rates, according to the media outlet. They also reprimanded former Prime Minister Imran Khan for failing to follow through on commitments made during his visit to China.

They claim that the previous government failed to satisfy the contractual need for a revolving fund for automatic payment of IPP dues, as well as future pledges. The summit saw representatives from a variety of industries, including energy, communications, railways, and others.

(With agency inputs)

Image: PTI