Coal-fired power project’s receivables swell to $150mln

ISLAMABAD: A coal-fired power project of 1,320 megawatts, built under the CPEC framework, is facing severe liquidity crunch as its receivables swelled to $150 million within one year of operation, an official said on Thursday.

The Port Qasim Electric Power Company (PQEPC), the first power project under the China Pakistan Economic Corridor (CPEC), contributed 10 billion kilowatt hours to the grid since its two plants of 660MW each was commissioned in April last year, its chairman Sheng Yuming said.

“We are in constant coordination with the concerned authorities apprising them on the difficulties we are facing as we have to make payments for imported coal as well as debt installments,” Yuming added. “We are also aware of the problems being faced by the government and we hope the issue would be resolved soon.” Around 4.5 million tons of coal are imported a year to run the two units.

The coal-fired power project was developed by a consortium of Al-Mirqab Capital of Qatar and Power China at the Port Qasim with a cost of around $2 billion. Civil works on the site started in May 2015. The first unit was inaugurated in November 2017, while the second unit began commercial operation in April 2018.

Yuming said the rupee devaluation also caused losses as according to the agreement the impact of currency devaluation could not be passed on. Rupee has lost 31 percent against the US dollar since 2017.

Circular debt is haunting the country’s energy sector, aggravating power shortfalls. Latest estimates said energy sector’s inter-corporate debt increased to around Rs800 billion, causing severe cash-flow issues for the power producers. The stuck payments are constraining power producers’ ability to ensure reliable supply and get reasonable returns on investment. In February, the government raised Rs200 billion to ease financial crunch in power sector.

The company’s official said Power China is evaluating other investment opportunities in the country’s renewable energy sector as well as setting up an industrial park. However, nothing substantial has been finalised as yet. “Based on data at our hands, it is predicted that Pakistan would be generating surplus electricity within next three years, and once the power woes are solved there would be rapid industrial growth in the country,” Yuming said. “Chinese companies are investing in Pakistan in the projects beneficial for the host country with an aim to further strengthen the brotherhood between the two countries.”

Chairman PQEPC said the company utilised the cutting-edge supercritical technology with the objective of zero percent emission levels. The company employed more than 400 local workforce, including engineers, which were trained in China.

Yuming said development of such an advanced and eco-friendly power plant set a precedent and would pursue other players to opt for environment-friendly technologies.