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China will be urged to fund liability from CPEC ‘dry powder’


Jul 12, 2014
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ISLAMABAD: The government has decided to request Chinese government to fund Rs 435 billion ($ 2.8 billion equivalent) liability from the CPEC "dry powder" to pay off their banks as per schedule in the next three years, official sources told Business Recorder. Pakistan has to pay Rs 364 billion ($ 2.3 billion) Return on Equity (RoE) payment to CPEC lenders in next three years (average 30 percent RoE coal projects whereas Rs 435 billion ($2.8b) "debt principal" repayment to CPEC lenders next 3 years (average 10-year tenor) Rs 1.5 per unit consumer tariff impact.

“We are requesting the Chinese government to fund $ 2.8 billion to pay off their banks while Pakistan repay that amount through a Nepra-approved corresponding consumer tariff increase in years 11-13," the sources added.

During the discussion at a recent meeting of Cabinet, Prime Minister questioned the rationale of installing coal-based power plant at Sahiwal by the previous government. He also enquired as to why the previous government had over-projected electricity demand in the country.

SAPM on Power & Petroleum, Tabish Gauhar responded that there was no justification whatsoever for inland imported coal-based power plants as transporting the fuel from seaports was costly. The only ostensible reason for over-projecting demand, he opined, was to accommodate as many plants as possible, probably for underlying tainted monetary motives.

Recently, World Bank officials quizzed government's economic team for not showing concrete progress on financial concessions from China on power projects established under the CPEC like other investors.

The sources said, the World Bank is of the view that Pakistan should ensure a level -playing field to all countries and companies.

“The World Bank has asked why the Chinese have not sacrificed windfall profits on power projects that were recently sacrificed by other IPPs in negotiations with the government," the sources maintained.

Copyright Business Recorder, 2021
There are a lot economic activities along the corridor and many of these projects are in fact privately funded by the commercial banks. They are not official government to government deal or projects.
Pakistan needed to learn how to manage them better.
Money for paying off debt should be raised in by selling / auctioning the illegal assets of the corrupt politicians ASAP instead of taking the money from the common man by raising tariffs.
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