Pakistan guards CPEC reality better than state secrets; power sector to face brunt
Sep 20, 2022
Beijing [China], September 20 : Secrets of CPEC projects are guarded more than state secrets by the Pakistani government still the occasional spills suggest that these projects are facing severe challenges to sustain which is posing a great hindrance to the country's power sector growth, media reports said.
The faultlines clearly highlight that as Pakistan is unable to resolve some key issues in the China-Pakistan Economic Corridor (CPEC) projects the investment flow from China is drying up, Inside Over reported.
Despite efforts by Pakistan keep CPEC reality a secret, different organs of the Pakistani government from time to time reveal that the projects are entangled in debt becoming a matter of local political interest and global scrutiny.
For Instance, in 2020, a 'leaked' report of an internal committee formed by the Pak government put some light on the exploitative nature of power sector deals and lack of transparency under CPEC.
As per the report, the projects have very high rates of return on investment assured to the Chinese companies. However, the reality was a start contrast to the promises made. The high returns condition itself translates into exorbitant power tariffs which further lead to unpaid dues at the end of power purchasing entities in Pakistan.
These projects' rates of return have ballooned the circular debt in the country's power sector, reported Inside Over. The piling up of power sector debt is impacting the fiscal health of Pakistan.
This grave issue is regularly raised in Pakistan's negotiations with multilateral Chinese lenders. In July 2022 for releasing a loan tranche, the International Monetary Fund (IMF) was reported to have asked the country to seek some concessions from China.
Pakistan owes around PKR300 billion to the Chinese independent power producers (IPPs) which is closely watched by the IMF. Pakistan's non-clearance of their dues makes the Chinese power sector investors nervous and many of them have started accusing Islamabad of breaching provisions of the agreements.
Zhang Jun, Chairman Energy investment of All-Pakistan Chinese Enterprises Association (APCEAP) recent spokes with various institutions including Prime Minister's Office.
Over ten Chinese investors, who have invested in power projects have established an Association viz Energy Enterprise Association (EEA) on the pattern of independent Power Producers (lPPs) raised their issues, reported Inside Over.
