ISLAMABAD: Finance Minister Muhammad Aurangzeb is to meet Geoffrey Ross Pyatt, United States Assistant Secretary of State for Energy Resources during his forthcoming visit to Washington to discuss energy sector issues and seek financial assistance for energy projects, well-informed sources told Business Recorder.
US Ambassador Donald Blome held a meeting with Finance Minister, on October 17, 2024 wherein besides issues related to economy, performance of energy sector also came under discussion.
According to sources, Blome sought details of proposed re-profiling of Chinese power sector debts and its overall impact on the economy, adding that Finance Minister revealed that China and Pakistan have engaged consultants to finalize the agreeable terms for re-profiling of debts for few years.
Aurangzeb discusses economic reforms, climate resilience with US envoy
Pakistan and China were ready to start signing re-profiling agreements during the recent visit of Chinese Prime Minister, but the process has been suspended after Karachi incident in which Chinese lost their lives.
The sources said Finance Minister who will be in Washington on October 21-26, 2024 to participate in 2024 IMF-World Bank annual meetings, is expected to discuss the issue of five wind power projects established by the US International Development Finance Corporation (DFC) as both sides have not reached a mutually agreed settlement.
In May last year, US Ambassador at a meeting with the then Minister of State for Foreign Affairs, Hina Rabbani Khar made it clear that DFC will not invest in Pakistan until wind power projects issues are sorted out.
Pakistan Embassy in Washington has also conveyed to Islamabad that Washington is serious in asking resolution of issues of wind power projects for future investment in energy sector.
The sources said, DFC, instead of giving its consent to reduce the tariff discounts for the five wind projects financed by them, has proposed/ offered a five year debt tenor extension and reduction in spread by 50 bps with the request that GoP should consider DFC’s proposal on the following merits: (i) provide the GoP with an immediate and overall greater reduction in the tariff; (ii) sets a new benchmark for foreign financing, which can benefit GoP in future lending from international DFIs (including Chinese lending); (iii) improves the country’s balance of payments by spreading debt payments over longer tenor; (iv) preserves investor confidence in the GoP and the sector, thereby assisting future investments in ARE sector which will help promote low-cost indigenous power generation and reduce dependence on imported fuels; and (v) NPV of savings to GoP from the reduction in tariffs is greater than the increased interest exposure over the extended debt term.
The sources further stated, Iran-Pakistan Gas Pipeline and import of petroleum products through informal channels is also a cause of serious concern for Washington and these issues will also come under discussion between the Finance Minister and U.S Assistant Secretary of State on Energy Resources.
Dispute with India on hydroelectric projects built by India in Illegally Occupied Kashmir (IOK) are also expected to be discussed. In March last year, Pakistan and the U.S held energy security dialogue wherein a mutual commitment to advance the transition to renewable energy and promote a more stable, secure, and prosperous energy future for both nations was affirmed.
Both governments resolved to continue deepening bilateral partnership through the US-Pakistan “Green Alliance” framework. The “Green Alliance” framework will help the United States and Pakistan jointly face climate, environmental, and economic needs, especially through partnership on renewable, sustainable and clean energy.
Copyright Business Recorder, 2024
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