ISLAMABAD: Ministry of Finance (MoF) has sought updated status from Power Division on commitments made by Caretaker Prime Minister, Anwar-ul-Haq Kakar, regarding payment issues of Chinese Independent Power Producers (IPPs), well informed sources told Business Recorder.
The non-payment to the Chinese IPPs remains an impediment in energy cooperation with China. During caretaker Prime Minister’s visit to Beijing, Minister for Power and Petroleum held a meeting with Vice Administrator for Chinese National Energy (NEA) where this issue was also raised.
It was agreed that payment of dues at an early date and streamlining the procedures for future payments without delay is essential and the early resolution of Revolving Account issue which has been pending for a long time is necessary.
Energy projects sans Chinese IPPs: PPIB resubmits transition from LIBOR to ‘SOFR’
Finance Division also sought a report on implementation of the ECC decision by the previous government regarding resolution of issue of Revolving Account for the Chinese IPPs.
Citing the references of previous correspondence of October 23, 2023 and November 3, 2023, Finance Division stated that necessary input on the ECC’s decision of December 5, 2022 regarding “necessary intimation may be made by the Power Division/ CPPA-G to the Chinese side on immediate basis” is still awaited.
On December 5, 2022, the ECC had conceded the demand of Chinese government and IPPs to replace the word Pakistan Energy Revolving Fund to Pakistan Energy Revolving Account aimed at resolving concerns of Chinese IPPs on payment issues. However, this issue is still simmering as the government entities are not clearing their dues except energy cost, which is an irritant to the Chinese government and Chinese IPPs.
The ECC had approved a proposal of the Finance Ministry to change the title of the revolving fund account for CPEC IPPs from Pakistan Energy Revolving Fund to Pakistan Energy Revolving Account, said a statement issued by the Ministry of Finance on December 5, 2022.
CPPA-G has established Pakistan Energy Revolving Account with seed money of Rs 50 billion meant to bridge the difference between due and discharged energy payments of Chinese IPPs.
However, CPEC IPPs are again complaining about CPPA-G for non-cooperation in payments. On the other hand, CPPA-G states that conversion of Pak Rupee in dollars is the domain of State Bank of Pakistan (SBP), which is being pursued actively.
Another key issue is deductions by the CPPA-G from imported coal-fired power plants, especially Port Qasim coal power plant sans violation of Power Purchase Agreement (PPAs). This dispute is still hurting Chinese CPEC IPPs. A Committee is working on the ways and means to sort out this issue.
Recently, Ministry of Foreign Affairs (MoFA) had asked the Ministry of Finance and Power Division to resolve payment issue of Chinese power companies as this issue is an impediment to future energy cooperation with China.
Private Power & Infrastructure Board (PPIB) has sent another letter to the SBP conveying its reservations for not converting their PKR into USD amounting to $600 million, which is creating serious issues for the power producers. The GoP has to pay over Rs 300 billion to Chinese power companies.
Copyright Business Recorder, 2023
Comments
Comments are closed.