Ongoing power projects: China has adopted ‘go slow’ policy after ‘unjustified’ criticism?

ISLAMABAD: China has reportedly adopted a “go slow” policy on ongoing coal-fired and hydropower projects of 3,444MW, after “unjustified” criticism by federal ministers of incumbent government on China-Pakistan Economic Corridor (CPEC) projects, well informed sources told Business Recorder.

This sentiment was reflected in a recent letter written by the newly appointed Special Assistant to the Prime Minister on CPEC Khalid Mansoor to the Chinese Ambassador Nong Rong, copies of which have also been sent to the concerned Ministers/ Ministries and Chief Executive Officers (CEO) of four companies.

CPEC Authority (CPECA) has been entrusted with the primary responsibility of coordination, monitoring and evaluation for ensuring smooth implementation of CEPC related projects in Pakistan.

Mansoor, who undertook CPEC projects worth $5 billion without paying a single penny as bribe despite the fact that he did these projects with Sindh government, has praised the Chinese Envoy for facilitating the Authority in developing better understanding at the top level.

“CPECA is indebted to you for extending help in developing better understanding with the key Chinese leadership,” said Mansoor.

According to SAPM on CPEC the following projects have been facing delays for a long time in achieving Financial Close (FC) and thus need attention of the Ambassador for expeditious processing by Sinosure and other lenders: (i) 1124MW Kohala Hydropower Project; (ii) 700MW Azad Pattan HPP; (iii) 1320 Thar Coal Block-1 and 300MW Gwadar Coal power plant.

“I express my desire to maintain and strengthen the cordial relationship between CPECA and the Chinese Embassy Islamabad for expeditiously resolving issues being faced by various CPEC projects,” Mansoor maintained.

Chinese government has also sought compensation of $38 million for those Chinese engineers/ workers killed in the terror attack while working on Dasu hydropower project. A high level committee has been in contact with the Chinese embassy for rationalization of compensation amount.

According to sources, Sinosure and other Chinese lenders are reluctant to extend financing for projects due to public criticism of Chinese projects.

This issue has also been discussed at length during the third meeting of Pak China relations Steering Committee.

Recently, the Federal Cabinet constituted a three-member Ministerial Committee to investigate road infrastructure and energy projects’ contracts awarded allegedly at inflated rates during the previous governments.

The committee comprising Minister for Communication (Convener) Murad Saeed, Minister for Energy Hammad Azhar and Minister for Information Fawad Chaudhary will submit its report to the Cabinet. Minister for Planning, Development and Special Initiatives, Asad Umar, who is defending the transparency of CPEC projects, was not included in the Committee.

According to sources, representatives of Chinese companies which have established power projects in Pakistan under CPEC maintain that whatever agreements were signed should be honoured in letter and spirit and on a sustainable basis instead of raising the same issues again and again.

The issue of overdue payment is one of the key factors discouraging new investors. For instance, Chinese power companies’ overdue amount is over Rs 200 billion for which the representatives of these companies visit Power Division time and again and write letters requesting payment, but are not yet getting an encouraging response from the authorities attributed to a burgeoning circular debt hovering at around Rs 2.3 trillion.

The sources said the government argues that it is unable to clear the entire overdue amount of over Rs 200 billion and is now trying to stagger the amount and most probably may opt for the same formula used to pay other IPPs i.e. in two installments - 40 percent and 60 percent.

Copyright Business Recorder, 2021