Delayed payments irritate Chinese companies working under CPEC

ISLAMABAD: Almost eight or nine months have elapsed, but the government has failed to set up revolving fund of Rs22 billion to ensure timely payments to four Chinese power projects installed under CPEC. The inordinate delay has further irritated the Chinese companies.

Chinese companies had earlier threatened the government that they will halt their future investment in power sector if they are not paid on time. According to the top officials, Finance Ministry had earlier indicated to arrange Rs22 billion for setting up the revolving fund, but under latest scenario, it has refused saying that Central Power Purchase Agency (CPPA) should arrange the required amount.

The CPPA’s top officials say that it is already facing loss owing to which circular debt has increased to Rs1.3 trillion, so it has no room available with it for sparing Rs22 billion for the head of revolving fund. The Finance Ministry, which has braved mammoth loss of Rs100 billion in revenue, is already in hot waters owing to which it has flatly refused to arrange Rs22 or give guarantee on the loan of the same amount for the purpose.

Interestingly, under CPEC framework, the government had extended assurance to the government of China that Chinese investors in power sector under CPEC will not be exposed to the delayed payment on account of the liquidity crisis in power sector.

It is pertinent to mention that Power Division is in the process to generate Rs200 billion loan against the 43 assets of the GENCOs and DISCOs and Finance Ministry is hesitant to extend the sovereign guarantee. Power Division top mandarin said that the summary seeking approval for setting up of Rs22 billion revolving fund is lying with Cabinet Division for months, but because of the ministry’s changed stance no development it is being made an issue.

He said to this effect Power Division has already sent a reminder to the authorities concerned informing them theissue is very sensitive as further delay may force the Chinese companies to stop generation on account of delayed payments.

“Yes, there is an incessant pressure on behalf of the Chinese companies on the government to keep them away from the delayed payments syndrome on account of circular debt as the government had extended the assurance to China that Chinese investors in power sector under CPEC will not be exposed to the delayed payment on account of the liquidity crisis in power sector and to ensure the timely payments, the government will set up the Revolving Fund,” a top official said.

The Fund’s amount will be equal to the 22 percent of the capacity of the four projects that include coal based Port Qasim Power Plant, Coal Based Sahiwal Power Plant, Engro Thar and UEP wind power plant.

Signed by Mr Rizwan Memon, the then secretary Power Division, a summary, of which copy is also available with The News, had been dispatched to the cabinet seeking approval for setting up the Revolving Fund of Rs22 billion to provide ease to the Chinese projects established under CPEC umbrella.

During the interim government, the then Prime Minister of Pakistan had time and again asked the finance and power division to sort out this issue of paramount importance, but this issue could not be resolved. “Now since then the issue is in limbo,” the official said.