Chinese Power Plants in Pakistan to be Shutoff Unless Payments Made

More than two dozen Chinese firms operating in Pakistan said that they will shut down their power plants this month unless the country will settle $1.59 billion or Rs300 billion in past due payments.

Ahsan Iqbal, Pakistan’s Minister for Planning and Development, led a meeting on Monday with more than 30 Chinese companies operating under the China-Pakistan Economic Corridor (CPEC) in various areas, including energy, communication, railways, and others, where he revealed the potential power plant shutoffs.

About 25 Chinese independent power producers (IPPs) spoke one after the other, complaining about the accumulation of their dues and threatening to shut down if they did not receive upfront payments within days.

Chinese independent power producers argued that fuel prices, particularly coal prices, had increased three to four times, implying they should be given three to four times more liquidity to make fuel arrangements.

Some of the IPPs said that while payments against power already supplied were not forthcoming and were financially hampered due to the COVID-19 pandemic, the tax authorities had started taxing them at higher rates. 

The IPPs added that the contractual requirement of a revolving fund for automatic payment of IPPs’ dues and succeeding promises by the previous administration during former Prime Minister Imran Khan’s visit to China also remained unfulfilled.

Iqbal promised that their financial difficulties would be resolved within this month.

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