Capacity tariff of Chinese IPPs: China appears unwilling to renegotiate?

KARACHI: China appears unwilling to renegotiate agreements of the capacity tariff of Chinese Independent Power Producers (IPPs) as Chinese ambassador to Pakistan Jiang Zaidong said it was a universal arrangement and Pakistan has delayed payment of $1billion.

Addressing at the All Pakistan Newspapers Society (APNS), Chinese Ambassador to Pakistan Jiang Zaidong shed light on the current state of China-Pakistan economic relations, particularly focusing on issues surrounding Chinese IPPs in Pakistan and the broader scope of the China-Pakistan Economic Corridor (CPEC).

Quoting Chinese saying: “When we drink water, we should not forget the real digger,” he said that IPPs resolved power issues in Pakistan and now there was no load shedding in Karachi.

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At that time, Pakistan’ power generate gap exceeded 5000KW and now after 11 years, Pakistan’s installed capacity is 45000MW and CPEC IPPs’ installed capacity has reached 8220MW, he informed.

Addressing recent media discussions on IPPs and China-Pakistan cooperation, Ambassador Jiang cautioned against disinformation that might affect ongoing discussions between the two countries. He urged for “solutions and encouragements” to maintain the strength of bilateral relations.

“It is not convenient to disclose everything in public but we are continuously providing SAFE deposit to Pakistan.”

Jiang Zaidong said Pakistan had promised to pay the capacity tariff to the Chinese IPPs and the capacity tariff was a universal arrangement made by Pakistani government to develop its power sector.

Furthermore, he said the Chinese investors had invested $5.5 billion in power sector and so far Pakistan had delayed payment of $1billion.

“Two Chinese power plants have been operational for seven years, with dividends now maturing in US dollars.”

Despite these challenges, Ambassador Jiang stressed the importance of finding systematic solutions rather than resorting to blame. He expressed personal interest in resolving these issues, stating, “I am personally interested to resolve this issue and during my vacation back in China, I will try to find my personal friends to find solutions.”

The ambassador reaffirmed China’s commitment to CPEC, describing it as a “game changer” for Pakistan. He highlighted that Chinese IPPs had significantly contributed to Pakistan’s power generation capacity, accounting for 18.2 percent of the country’s total installed capacity.

Looking ahead, the ambassador spoke about China’s plans for advanced modernization, which he believes will support Pakistan’s development. He mentioned six initiatives proposed by President Xi Jinping at the Beijing Summit Forum, stating that those initiatives applied to the process of joint cooperation with Pakistan in advanced modernisation.

Ambassador Jiang also expressed interest in expanding cooperation in agriculture and mining sectors, where Pakistan enjoys export advantages. He mentioned ongoing discussions to cultivate Pakistani talents in the IT sector and plans to offer advanced training to 1,000 Pakistani agriculture experts.

The ambassador emphasised the importance of security for Chinese developments in Pakistan and expressed gratitude to the Pakistani government and armed forces for their efforts to protect Chinese nationals.

“I am very confident that China’s developments in Pakistan will strengthen the friendship of both countries. China will unwaveringly support Pakistan in bigger role.”

He said that 74 percent of the Pakistan’s loans were from Western countries and financial institutions, however, china’s loan to Pakistan was conducive to the country’s development hence they were very clear and insisting on that CPEC was a game changer for Pakistan and would change its destiny.

“Our bilateral practical cooperation and our exchanges of state governance experience and second phase of CPEC will help Pakistan to achieve the advanced modernization.”

Chinese ambassador believed that China’s belt and road initiatives and the importance of CPEC would remain unchanged despite certain difficulties in CPEC construction projects; adding the cooperation in energy and constructions under CPEC was still a right decision as it enabled Pakistan to have solid foundation for advanced development.

He said they were trying to open Khunjerab Pass, albeit there were some constraint elements that restrained our exchanges.

The event encompassed more than just economic discussions. Dawn Media Group CEO Hameed Haroon offered insights into Chinese heritage and culture, broadening the dialogue beyond current affairs.

Copyright Business Recorder, 2024