$8bn CPEC debt re-profiling plan being prepared

ISLAMABAD: The Ministry of Finance is said to have constituted a task force that includes financial experts from China and Pakistan as well as government officials to prepare an initial plan for re-profiling of existing debt stock of about $ 8 billion of CPEC (China Pakistan Economic Corridor) energy projects’ foreign currency debt for five years, well-informed sources told Business Recorder.

The composition of task force is as follows: (i) Additional Secretary (Corporate Finance), Convener/Coordinator; (ii) Rihan Akhtar, CEO, CPPA-G, Member; (iii) Usman Hameed, Head Investment Banking, HBL, Member; and (iv) Zilong Wang, head of IDB Debt Restructuring Team, CICC.

The task force will perform the following tasks: (i) present a preliminary plan for re-profiling of the existing debt stock of CPEC energy project’s FCY debt; (ii) assist in negotiations with Chinese lenders of CPEC energy projects’ FCY debt; (iii) present final plan for re-profiling of the existing debt stock of CPEC energy project’s FCY, acceptable to the Chinese lenders; (iv) assist in finalization of regulatory approvals and amendments agreements of the debt re-profiling; and (v) any other suggestions for seamless implementation of proposals.

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The sources said the Power Division will ensure sharing all the necessary information with the Task Force, which will report to the Steering Committee co-chaired by Minister for Finance and Revenue and Minister for Power.

The sources said issue of debt re-profiling was also discussed at a recent meeting between the Chinese experts and government of Pakistan’s officials in the light of discussions during the visit of Minister for Power, Sardar Awais Khan Leghari and Minister for Finance, Muhammad Aurangzeb to China last month.

According to sources, Chinese experts argued that China understands the concerns of Pakistani side about forex etc. and suggested that an initial plan in this regard be shared with Beijing including the state owned insurance company, ie, M/s Sinosure, and the Chinese project companies and their lenders before placing it before the Chinese country top leadership.

The following Chinese experts participated in the meeting: Gu Hongbin, Chief Technical Expert, China Renewable Energy Engineering Institute (CREEI), National Energy Administration (NEA), Ma Zhongping, Deputy Chief Engineer, Xian Survey Centre of China Geological Survey, Ministry of National Resources, Qiao Zheng, Director level official (rank 2), Highway Bureau, Yu Tao, Deputy Director, Department of General Affairs) Foreign Affairs, Yang Ming, official Ministry of Foreign Affairs, Yang Guangyuan, Minister Counsellor, Chinese Embassy and Wang Yiqiu, interpreter, Chinese embassy.

The sources said debt stock of operational power projects under CPEC stood at $7 billion but if debts of upcoming projects are also taken into account, the total stock will approximately be $ 10 billion.

Finance Minister, Muhammad Aurangzeb has already constituted power sector financing Steering Committee under his own chairmanship, with Minister for Power, Secretary Power and Secretary Finance as members.

The sources said multiple options with respect to re-profiling of debts of CPEC power projects are under consideration but nothing is yet final.

Portfolio of power generation and transmission line projects being implemented by PPIB under CPEC is as follows: Sahiwal coal power project, 1320 MW, financial outlay/project cost $1.9122 billion, Port Qasim coal power project 1,320 MW, project cost $1.9122 billion, Engro Thar coal power and mine project, 660 MW, project cost $995.4 million, Hubco coal power project 1,320 MW, project cost $ 1.9122 billion, Karoot hydropower project, 720 MW, project cost $1.698 billion, Hubco Thar coal power project, 330 MW, project cost $ 497.70 million, Thar Coal Block-1, Power Project 1,320 MW, project cost $ 1.9122 billion, ThalNova Thar coal power project 330 MW, project cost $ 497.70 million and Matiari– Lahore HVDC transmission line, project cost $ 1.658 billion.

Copyright Business Recorder, 2024