Pakistan trying to renegotiate with China over power plants: report

ISLAMABAD: Pakistan is trying to renegotiate Belt and Road projects repayments with China, a UK newspaper reported. The renegotiation talks began after Islamabad released a report by a committee convened by the prime minister that accused Chinese and local power companies of “malpractices” and exaggerating costs. The financial stress caused by the coronavirus pandemic has lent the negotiations greater urgency. The report said coal plants Huaneng Shandong Ruyi (Pakistan) Energy and Port Qasim Electric Power Company were overcharging by about $3bn over the 30-year project lifetime through inflated set-up costs and interest payments. Set-up costs alone for the two plants were inflated by more than Rs32bn ($204m) over “misrepresentation” of interest payments. Under pressure from Beijing, Islamabad has deferred a probe into the alleged corruption while it tries to win more favourable terms through back channel negotiations. According to people familiar with the talks, the Pakistan government is not asking to renegotiate power tariffs for now, but instead wants to delay repayments for up to 10 years. Given the economic circumstances we are trying to seek relief wherever possible. That’s why we want to first deal with all independent power producers informally and see how far we progress, before we formalise this process,” a Pakistani cabinet minister, who wished to remain anonymous, told the Financial Times.