Islamabad [Pakistan], November 22 (ANI): China on Monday conveyed to Pakistan that huge unpaid power bills are forcing the drying up of Chinese funding to other Pak power projects.
The issue of receivables and opening of a revolving account for Chinese CPEC Independent Power Producers (IPPs) is still pending with their receivables now over Rs 300 billion, reported Business Recorder.
The huge receivables of existing Chinese power projects are the main hurdle in convincing banks for further funding in other power projects to achieve their financial closures, well-informed sources in the federal government told Business Recorder.
Last month a detailed meeting was held between Secretary Power Division, Rashid Mahmood Langrial and Vice President of China Export and Credit Insurance Corporation (Sinosure) Xu Xinwei to discuss the financial closure of certain CPEC energy projects.
M/s Sinosure has shared a list of the six following banks involved in financing the 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 was clear on Pakistan's concerns and issues in the project's financial closures, saying that they understand four major projects of concern, i.e., Thar Block-1, Azad Pattan, Kohala and Gwadar power project. These projects are very highly valued by the Chinese government and relevant financial institutions, reported Business Recorder.
The Chinese side, sources said, noted that since last year Sinosure made a special task force to take these projects forward with Xu Xinwei as team leader of Task Force. He personally conducted numerous meetings and set up Wechat groups to monitor regular progress on Thar Block-1 and Gwadar coal power projects.
He maintained that since February 2022, despite the overdue electricity bills issue, Sinosure has been consistently monitoring progress and has finished deliberations with the Board of Directors.
For the past 6-7 months, Sinosure has been pushing six commercial banks for all the projects to issue loan plans because only long-term solutions from syndicates can be made possible with the approval of the government, reported Business Recorder.
Sinosure also met representatives of Shanghai Electric and the six banks face to face and further negotiations will continue to weigh progress on the project.
Chinese side further stated that for the Thar-coal projects, the current situation suggests that some of the banks are holding back investing in CPEC projects, due to the overdue power tariffs as they lack confidence in new projects, since most of the banks are public listed companies and have strict risk management systems, reported Business Recorder.
Meanwhile, Secretary Power then noted that since Thar Block-1 power project employed local coal, its commercial operation would help the energy sector's overall ability to make repayments because of cheaper electricity generation.
Similarly, if Kohala and Azad Pattan power projects could be completed, they would help in bringing down the overall basket price and would help in making payments promptly to the banks which was in both Pakistan and the banks' interest, reported Business Recorder.
Responding to Secretary Power, the Chinese side said that the overdue electricity bills were still a major concern for the banks and if that could be resolved then Sinosure could push forward the banks' progress, adding that being unable to receive financing solutions from the banks, Chinese officials are unable to move forward to take the next steps, reported Business Recorder. (ANI)