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CPEC power projects: China concerned over payment issues

maithil

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Chinese companies working on power projects, initiated under China Pakistan Economic Corridor (CPEC), are still facing financial woes despite Prime Minister’s repeated assurances, well informed sources told Business Recorder.

The Chinese government through Pakistan’s embassy in Beijing and its own embassy in Islamabad has raised this issue at all forums. Chinese insurance company M/s Sinosure is also unwilling to insure new financing for power sector projects due to failure to meet contractual obligations of companies that have already established projects.

Official documents available with Business Recorder reveal that Sindh Engro Coal Mining Company (SECMC) has informed Power Division that due to significant delays in the opening of Letter of Credit (L/Cs) and foreign remittance, its mining operations are severely impacted.

SECMC is also incurring demurrage charges, liquidated damages and penalties due to delay in approvals, which are also resulting in damage of reputation, as well as, additional cost.
SECMC is continuously engaged with banks but significant amount is still pending.

Our O&M contractor has now communicated that due to significant delay in their payment they are unable to continue mine operations. We request your immediate intervention to support remittance of payment to our Chinese O&M contractor; otherwise, mine operations will stop with immediate effect,” said Amir Iqbal, CEO SECMC in his letter to Secretary Power.

Shutting down the operations of the mine will lead to shut-down of the four power plants operating on Thar coal namely, Engro Power Thar Limited (EPTL 660 MW), Thar Energy Limited (300 MW), Thal Nova Power Thar(Pvt.) Limited (330 MW) and Lucky Electric Power Co(660 MW). Equivalent power capacities operated on imported coal will result in additional forex burden of $ 85 million per month on the economy and will also result in three times more expensive power generation, he added.

Meanwhile, Port Qasim Electric Power (Pvt.) Co (PQEPC) has informed the government that both its units of 1320 MW are about to shut down as a direct result of the default of GoP’s obligations.

According to the power company, currently due to outstanding foreign exchange requests with the State Bank of Pakistan (SBP), the coal supplier discontinued shipments after January 2023. The shortage of coal has cause significant financial strain for the company as the coal inventory has been fully depleted, causing a shut down of both units resulting in capacity payments deductions.


Chinese Charge d’ Affairs to Pakistan, Pang Chaunxue, in a letter to Minister for Power Khurram Dastgir Khan has shared the concerns of Chinese companies that have established power projects under CPEC initiative.

According to Pang Chaunxue, CPEC coal-fired power plants now face difficulty in buying coal due to foreign exchange restrictions including Port Qasim Power Plant which has shut down as its coal has run out. Meanwhile, the capacity payments deduction is still pending resolution which means the company could not get electricity payment, or the capacity payment, and is facing a very difficult situation.

The company has Embassy’s help to coordinate with the competent forum to solve difficulties, he said, hoping that the Minister for Power could play a leading and coordinating role and introduce measures to solve the capacity payment deduction issue, etc.

“This year marks the 10th anniversary of CPEC. I believe that under your guidance (Power Minister), these issues can be solved in a proper way. We will jointly promote the high-quality development of CPEC and serve Pakistan to improve its economy and export competiveness,” said Pang Chunxue.

Islamabad has shown willingness to amend/ modify Pakistan Energy Revolving Account (PERA) to sort out concerns of Chinese lenders of CPEC IPPs with respect to payment in future.

The sources said, in addition to CPEC projects, other IPPs, public sector power generation plants, Pakistan State Oil (PSO), SNGPL and SSGCL, PPL, etc., also are facing serious financial constraints due to non-payment by CPPA-G due to which circular debt is now over Rs 2.6 trillion.

 
Chinese companies working on power projects, initiated under China Pakistan Economic Corridor (CPEC), are still facing financial woes despite Prime Minister’s repeated assurances, well informed sources told Business Recorder.

The Chinese government through Pakistan’s embassy in Beijing and its own embassy in Islamabad has raised this issue at all forums. Chinese insurance company M/s Sinosure is also unwilling to insure new financing for power sector projects due to failure to meet contractual obligations of companies that have already established projects.

Official documents available with Business Recorder reveal that Sindh Engro Coal Mining Company (SECMC) has informed Power Division that due to significant delays in the opening of Letter of Credit (L/Cs) and foreign remittance, its mining operations are severely impacted.

SECMC is also incurring demurrage charges, liquidated damages and penalties due to delay in approvals, which are also resulting in damage of reputation, as well as, additional cost.
SECMC is continuously engaged with banks but significant amount is still pending.

Our O&M contractor has now communicated that due to significant delay in their payment they are unable to continue mine operations. We request your immediate intervention to support remittance of payment to our Chinese O&M contractor; otherwise, mine operations will stop with immediate effect,” said Amir Iqbal, CEO SECMC in his letter to Secretary Power.

Shutting down the operations of the mine will lead to shut-down of the four power plants operating on Thar coal namely, Engro Power Thar Limited (EPTL 660 MW), Thar Energy Limited (300 MW), Thal Nova Power Thar(Pvt.) Limited (330 MW) and Lucky Electric Power Co(660 MW). Equivalent power capacities operated on imported coal will result in additional forex burden of $ 85 million per month on the economy and will also result in three times more expensive power generation, he added.

Meanwhile, Port Qasim Electric Power (Pvt.) Co (PQEPC) has informed the government that both its units of 1320 MW are about to shut down as a direct result of the default of GoP’s obligations.

According to the power company, currently due to outstanding foreign exchange requests with the State Bank of Pakistan (SBP), the coal supplier discontinued shipments after January 2023. The shortage of coal has cause significant financial strain for the company as the coal inventory has been fully depleted, causing a shut down of both units resulting in capacity payments deductions.


Chinese Charge d’ Affairs to Pakistan, Pang Chaunxue, in a letter to Minister for Power Khurram Dastgir Khan has shared the concerns of Chinese companies that have established power projects under CPEC initiative.

According to Pang Chaunxue, CPEC coal-fired power plants now face difficulty in buying coal due to foreign exchange restrictions including Port Qasim Power Plant which has shut down as its coal has run out. Meanwhile, the capacity payments deduction is still pending resolution which means the company could not get electricity payment, or the capacity payment, and is facing a very difficult situation.

The company has Embassy’s help to coordinate with the competent forum to solve difficulties, he said, hoping that the Minister for Power could play a leading and coordinating role and introduce measures to solve the capacity payment deduction issue, etc.

“This year marks the 10th anniversary of CPEC. I believe that under your guidance (Power Minister), these issues can be solved in a proper way. We will jointly promote the high-quality development of CPEC and serve Pakistan to improve its economy and export competiveness,” said Pang Chunxue.

Islamabad has shown willingness to amend/ modify Pakistan Energy Revolving Account (PERA) to sort out concerns of Chinese lenders of CPEC IPPs with respect to payment in future.

The sources said, in addition to CPEC projects, other IPPs, public sector power generation plants, Pakistan State Oil (PSO), SNGPL and SSGCL, PPL, etc., also are facing serious financial constraints due to non-payment by CPPA-G due to which circular debt is now over Rs 2.6 trillion.


The loan China gave to the corrupt Pakistani government was for these Chinese companies. It may work out for now... But it will fail very soon.


They Chinese are idiots to invest in the world"s most corrupt nation of Faujistan.
 
@maithil @Clutch

The Chinese contracts were extortionate and mala fide. GOP should simply confiscate all these assets and repudiate all debt. They can operate the power plant and mines on their own. No need to pay or remit the Chinese anything.

Regards
 
@maithil @Clutch

The Chinese contracts were extortionate and mala fide. GOP should simply confiscate all these assets and repudiate all debt. They can operate the power plant and mines on their own. No need to pay or remit the Chinese anything.

Regards
Indian try to pit Pakistan against China harder, but you need much higher IQ for the job.
 
Last edited:
@etylo said: Indian try pit Pakistan against China

No need for us to do anything. Your crooked govt will do the needful

Regards
 
Chinese must be cursing themselves for aligning with this perennially crooked nation. The world has moved on and poorest of the poor nations have developed and but our country is incapable of progress and development and Chinese must be doing some real introspection as to how to extricate itself from this leech of a nation.
 
Indian try to pit Pakistan against China harder, but you need much higher IQ for the job.
They dont need to.

Pakistan govt screwed itself in multiple holes ... they dont need India to do it.

All of them are traitors... sold their country and soul to anyone .. habibis... xijis...
 
@maithil @Clutch

The Chinese contracts were extortionate and mala fide. GOP should simply confiscate all these assets and repudiate all debt. They can operate the power plant and mines on their own. No need to pay or remit the Chinese anything.

Regards

Good idea. But who knows what Pakistan’s government has agreed for in those contracts.. There is a reason why Chinese insist on super secrecy...
 
They dont need to.

Pakistan govt screwed itself in multiple holes ... they dont need India to do it.

All of them are traitors... sold their country and soul to anyone .. habibis... xijis...
CPEC is between Pakistan and China, none of the business of you ignorant dirty people.
 
They Chinese are idiots to invest in the world"s most corrupt nation of Faujistan.
Totally wrong. If they get control of the Arabian sea ports, it will be a strategic advantage for peanuts. After getting controlling interest in seaports, they should focus on investing in airports.
 
Totally wrong. If they get control of the Arabian sea ports, it will be a strategic advantage for peanuts. After getting controlling interest in seaports, they should focus on investing in airports.

That would trigger the Americans beyond control.
 
Chinese have full control of Gwadar and infrastructure leading to Xinjiang for 40 years. I don't think they care what happens either way.

That explains why the Americans are already triggered and always seeking insight into CPEC agreement.
 
Totally wrong. If they get control of the Arabian sea ports, it will be a strategic advantage for peanuts. After getting controlling interest in seaports, they should focus on investing in airports.

They should then spend their money in Somalia next! Lol
 
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