Power sector: Chinese investors irked by non-payment of returns?
ISLAMABAD: Chinese companies are reportedly not interested in making further investment in Pakistan, citing inappropriate treatment, especially in payment to companies that invested in the power sector, well-informed sources told Business Recorder.
China has invested over $60 billion in Pakistan in different sectors through its private sector companies including power sector, but are not being paid their returns as per the agreements, the sources added.
On July 12, 2021, Chinese ambassador Nong Rong met Minister for Planning, Development and Special Initiatives, Asad Umar and discussed with him matters relating to the 10th JCC, Joint Working Group (JWG) meetings and economic cooperation between the two countries.
However, the 10th JCC meeting scheduled for July 16, 2021 (today) has been postponed as both sides have still not agreed on financing of different projects, including multi-billion-dollar Main Line-1 (ML -1) project.
“JCC-10 meeting on CPEC which was scheduled to be held on July 16, 2021, has been postponed to a later date after Eid. Fresh date will be shared when finalized. Meanwhile preparations continue,” said Chairman CPEC Authority, Lt. General Asim Salim Bajwa (retired) in a tweet.
The concerned Ministries have completed their paperwork for JCC along with current status of projects, issues and future line of action. Likewise, Chinese companies that have invested in different projects in Pakistan have shared their concerns with the Chinese government.
Some top-level public office holders have hurled accusations at over-invoicing by Chinese companies which established projects in power sector and have accused PML(N) government of establishing power projects that were “25 per cent more expensive” than their counterparts in other parts of the world.
Some of the projects are already under investigation by National Accountability Bureau (NAB). The Chairman NAB and Chinese ambassador also held meetings to ensure transparency in projects.
The sources said Chinese companies are not only writing letters but also their representatives are personally visiting Power Division and other concerned organizations, demanding payments as per the agreements. However, they get just “promises” from the officials that efforts are being made to arrange funds for payments.
The country’s energy sector circular debt touched Rs 1.34 trillion as of June 30, 2021 with no hope of its resolution in the near future, which is one of the key concerns of energy sector investors.
“Chinese question why Pakistan requested them to establish projects if there were no resources for payments against their investment,” the sources continued.
Chinese have not given a drawdown to the two coal-fired power projects in Thar because lenders are not ready to release the funds due to the situation being faced by companies which have already invested in Pakistan.
The sources said, Chinese companies are angered at the proposals for renegotiation of existing agreements on the lines of Independent Power Producers (IPPs).
“Chinese say they are ready to extend financial assistance to Pakistan but are not willing to renegotiate existing agreements,” the sources maintained.
Copyright Business Recorder, 2021