Unpaid electricity bills hamper Chinese financing of Pakistan’s power projects

China told Pakistan on Monday that huge unpaid electricity bills are forcing the drying up of Chinese funding for other Pakistani power projects. The issue of receivables and the opening of a revolving account for China’s CPEC Independent Power Producers (IPPs) are still pending, with their receivables now exceeding Rs 300 billion, Business Recorder reported.

Huge receivables from existing Chinese energy projects are the biggest hurdle in convincing banks to finance more other energy projects in order to achieve their financial closes, knowledgeable federal government sources told Business Recorder. Last month, a detailed meeting was held between Energy Division Secretary Rashid Mahmood Langrial and China Export and Credit Insurance Corporation (Sinosure) Vice President Xu Xinwei to discuss the financial close of some energy projects in the country. CPEC.

M/s Sinosure has shared a list of the following six banks involved in financing Thar Block-1 power projects by Shanghai Electric: (ii) China Development Bank (CDB); (ii) Industrial and Commercial Bank of China (ICBC); (iii) Postal Savings Bank of China Limited (PSBC); (iv) Bank of Communications (BCM); (v) China Minsheng Banking Corporation Limited; and (vi) Agricultural Bank of China (ABC). According to sources, the Chinese side has been clear on Pakistan’s concerns and issues over the financial closures of the project, saying it includes four major projects of concern, namely Block Thar-1, Azad Pattan, Kohala and Project energy of Gwadar. These projects are highly valued by the Chinese government and relevant financial institutions, Business Recorder reported.

The Chinese side, sources said, noted that since last year, Sinosure has set up a special working group to push forward these projects with Xu Xinwei as the working group’s team leader. He personally conducted many meetings and set up Wechat groups to follow the regular progress of Thar Block-1 and Gwadar coal power projects. He maintained that since February 2022, despite the problem of overdue electricity bills, Sinosure has been constantly monitoring progress and has completed deliberations with the board.

Over the past 6-7 months, Sinosure has pushed six commercial banks for all projects to issue loan plans as only long-term union solutions can be made possible with government approval, Business Recorder reported. . Sinosure has also met with representatives of Shanghai Electric and the six banks face to face and further negotiations will continue to weigh on the progress of the project.

The Chinese side further said that for the Thar coal projects, the current situation suggests that some banks are withholding investment in CPEC projects, due to lagging electricity tariffs, as they lack confidence in new projects. , as most banks are public. listed companies and have strict risk management systems, Business Recorder reported. Meanwhile, Secretary Power went on to note that since the Thar Block-1 power project used local coal, its commercial operation would help the overall ability of the power sector to make paybacks due to electricity generation. less expensive.

Similarly, if the Kohala and Azad Pattan power projects could be completed, they would help bring down the overall price of the basket and help to make payments to the banks quickly, which was in the interest of both Pakistan and banks, Business Recorder reported. Responding to Secretary Power, the Chinese side said that overdue electricity bills were still a major concern for banks and if this could be resolved, Sinosure could take the progress of banks forward, adding that being unable to receive bank financing solutions, Chinese officials are unable to move forward to take the next steps, Business Recorder reported. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)