Purchase of power: payments to Chinese companies to be facilitated through revolving fund

The government will set up a revolving fund to facilitate direct payments to Chinese power producing companies against purchase of electricity to help avert payment issues due to circular debt, it is learnt. According to sources, the government would pay Chinese electric power producing companies from the revolving fund if they are unable to get the receivable amount against the sale of electricity to consumers due to circular debt.
The sources said that Chinese investment companies that have launched their energy projects raised serious concern with the government for failure to regularly pay independent power producers due to on-going issue of circular debt for several years. The government decided to set up a revolving fund to remove the concerns of Chinese investment companies and make direct payments to them if they do not receive their dues in return for sale of electricity.
The Chinese companies are investing $32.66 billion in energy sector in Pakistan to overcome energy crisis. The Chinese companies are investing $1.98 billion in Port Qasim Electricity Company Coal Fired, 2x660, Sindh (1,320 MW), $1.6 billion Sahiwal 2x330 MW Coal-fired Power Plant, Punjab, $2 billion investment in Engro Thar 4x330 MW Coal-fired, Thar, Sindh, $1.7 billion in Surface Mine in Block II of Thar Coalfield, 6.5 mtpa, Thar, Sindh, $360 million in Gwadar Coal Power Project, Gwadar (300 MW), $970 million MW in HUBCO Coal Power Plant 1x660 MW, Hub Balochistan, $1.6 billion in Rahimyar Khan Coal Power Project, Punjab (1,320 MW), $1.3 billion in SSRL Thar Coal Block 6.5 mpta & CPIH Mine Mouth Power Plant, Thar, Sindh (1,320 MW), $1.35 billion in Quaid-e-Azam 1,000 MW Solar Park, Bahawalpur, Punjab, $125 million in Dawood 50 MW wind Farm, Bhambore, Sindh, $250 million in UEP 100 MW wind Farm, Jhimpir, Sindh, $134 million in Sachal 50 MW Wind Farm, Jhimpir, Sindh, $125 million in Sunnec 50 MW Wind Farm, Jhimpir, Sindh, $1.8 billion in Suki Hydropower Station, KPK (870 MW), $1.4 billion in Karot Hydropower Station, AJK and Punjab (720 MW), $1.5 billion in Matiari to Lahore Transmission Line, and $1.5 billion in Matiari to Faisalabad Transmission Line.
Chinese companies are also proposing to invest $5.2 billion in Gaddani Power Park Project Balochistan/Gaddani (1,320 MW), $970 million in HUBCO Coal Power Plant 1x660 MW, Hub Balochistan, $800 million in Salt Range Mine Mouth Power Project including mining, Punjab (300 MW), $2.4 billion Kohala Hydel Project, AJK (1,100 MW), $150 million in Pakistan Wind Farm II 2x50 MW (Jhimpir, Thatta, Sindh), $1.3 billion in Thar Mine Mouth Oracle, Thar Sindh (1,320 MW), $1.6 billion in Muzaffargarh Coal Power Project, Punjab (1,320 MW) and $550 million in Gas Power Plant 525 MW.
China is investing $10.63 billion in transport and infrastructure through government to government agreements including $6.1 billion in construction of roads, $3.7 billion in rail network, $793 million in Gwadar Port and $46 million in other sectors. China Exim Bank (China Export Import Bank) would extend assistance to Pakistan at 1.6 percent interest rate for infrastructure projects under the China-Pakistan Economic Corridor (CPEC).
According to documents available with Business Recorder, both the countries are following steps required for G2G agreements which include: (i) Technical Preparation (feasibility study, PC-1), (ii) Government Framework Agreement (iii) Selection of Chinese Companies through budding process (iv) Commercial Contract (v) Agreement on Financing Arrangement and (vi) Implementation of Construction by Companies.
The projects relating to construction of roads are: (i) KKH Phase II (Raikot-Islamabad Section), 440 kms, $3.5 billion; and (ii) Peshawar-Karachi Motorway (Multan-Sukkur Section) 392 kms, $2.6 billion. The projects about rail sector are expansion and reconstruction of existing line ML-1 (Main Line from Peshawar to Karachi), 1,736 kms, $3.65 billion and Havelian Dry Port, 450 million units, $40 million.
The CPEC Gwadar port related projects are: (i) Eastbay Expressway, $140.6 million, (ii) Gwadar International Airport, $230 million, (iii) Construction of Breakwaters, $123 million (iv) Dredging of berthing areas & channels, $27 million (v) Infrastructure for Free Zone & EPZs port related industries, $32 million, (vi) Necessary Facilities of Free Water Treatment and Supply, $130 million, (vii) Hospital at Gwadar $100 million and (viii) Technical and Vocational Institute at Gwadar, $10 million. The other projects are Cross Border Optical Fiber Cable, Khunjerab to Islamabad, $44 million and DTMB, Digital Television, Murree, $44 million.