Govt seeks Chinese IPPs’ approval for revised settlement to unlock Rs1.225 trillion bank facility

The government is attempting to persuade Chinese Independent Power Producers (IPPs) operating under the China-Pakistan Economic Corridor to sign revised settlement agreements, similar to those already accepted by other IPPs. This move is intended to unlock the remaining funds from a Rs1.225 trillion bank facility arranged to reduce the country's circular debt. The Central Power Purchasing Agency-Guaranteed (CPPA-G) currently owes over Rs560 billion, or approximately $2 billion, to Chinese IPPs, a figure that has risen due to delayed payments caused by government financial constraints. The National Energy Task Force, led by Minister for Power Sardar Awais Ahmed Khan Leghari, has reportedly completed work on a proposed mechanism for these Chinese firms. While the government has already paid around Rs100 billion to nearly 16 Chinese power projects, authorities are reluctant to make further ad hoc payments without revised settlement terms. The financing facility was secured from 18 commercial banks, but a significant portion remains undisbursed because CPEC IPPs have not agreed to provide discounts on their outstanding receivables. The federal cabinet has decided that no payments from the facility will be released unless CPEC projects accept discounted settlements. The government has also finalized proposals to renegotiate payment arrangements with Chinese IPPs or proceed under existing agreements if stakeholders agree to revised terms.

(Source：Pakistan Today)