CPEC energy projects: China for maintaining stability in taxes, power tariffs

China proposed Pakistan to maintain stability in taxes and power tariffs for CPEC energy projects while establishing a better regulated and more efficient power market.

China suggested this during the meeting of 9th Joint Cooperation Committee (JCC) of CPEC, held recently in Islamabad. Federal Minister Planning, Development & Reform Khusro Bakhtiar and vice chairman of National Development & Reform Commission Ning Ji Zhe led Pakistani and Chinese sides respectively during the meeting.

According to official documents available with Business Recorder, both sides agreed on the need to ensure CPEC policy stability for sustainable development of projects.

The two sides agreed that all CPEC projects had been strictly reviewed and granted approvals by the Pakistani side on a case-by-case basis. These projects are consistent with and fall within the policy and regulatory framework of Pakistan.

The current CPEC policies and agreements shall be jointly executed by both the Chinese and the Pakistani side, documents suggest and revealed the Chinese side proposed that the Pakistani side maintains stability in its taxes and power tariffs.

The two sides shall enhance communication and coordination, analyze the impact of changing policies on CPEC projects, and be aware of potential risks so as to ensure sustainable development of CPEC energy, both China and Pakistan agreed.

According to documents, as to tariff payment, currency depreciation and other affairs, the Pakistani side stated that the delay of tariff payment is being improved.

The Chinese side also noticed that the Pakistani side was taking various measures to balance and coordinate various factors and hoped that the Pakistani side could continue its high attention to related issues, ensure successful project execution and proceed to resolve issues brought by delay of tariff payment and currency depreciation.

Documents disclosed that Chinese side also paid attention to the coordinated development between power generation and power evacuation arrangements and appreciated the efforts made by the Pakistani side on the construction of power transmission system supporting CPEC projects.

About advanced metering system (AMI) system for Pakistani distribution companies, Pakistan proposed inclusion of this project into CPEC framework on a priority basis by both sides.

China acknowledged Pakistan's inspiration to develop AMI system and supports Chinese companies to offer capacity building and technical apparatus based on commercial principles.

During the meeting, both sides noted that the joint expert panel reached consensus on the Report of Joint Study on Power Market in Pakistan (finalized on November 3, 2019% which indicates that the power supply-demand will be basically balanced in Pakistan from 2019 to 2030.

After 2025, apart from minor surplus in specific years due to concentrated commissioning of power generation projects, Pakistan may enjoy balance generally in all the other years.

Both sides agreed in principle that the project list may be reviewed and adjusted based on the supplementary protocol to agreement on the China-Pakistan Economic Corridor Energy Projects Cooperation between the two countries (signed on February 3, 2016) and the recommendations by expert panels with regard to the project list adjustment in line with Report of Joint Study on Power Market in Pakistan.

Then the outcome of the adjustment shall be endorsed in the form of the signed agreement between China National Energy Administration and Pakistan Ministry of Energy (Power Division), both concluded.

Official documents revealed that Chinese and Pakistani leaders have recently reached an agreement on advancing CPEC development with high standards and building CPEC projects into model projects of "Belt and Road" high-quality development.

In the spirit of their instructions and for a sound, orderly and sustainable CPEC energy cooperation, the joint expert team has drafted the Guiding Principles for CPEC Energy Cooperation Projects.

During JCC meeting, both sides agreed that the draft and launch of the Guiding Principles at the current stage is an important step taken to ensure long and steady progress of CPEC as well as the construction of high-quality BRI model projects.

The two sides also agreed to revise and improve the terms of the guiding principles and strive to launch the document within this year.

Copyright Business Recorder, 2019