Pakistan, China to establish working group to resolve pending payments issues

Pakistan and China have agreed to establish a working group comprising members from the Port Qasim Electric Power Company (PQEPC), the Power Division and the Finance Division to resolve pending dues of PKR 94.5 billion ($340 million).

This was decided in a meeting between Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb and a delegation of officials from the PQEPC led by Power China President Yang Tianyu on Thursday in Islamabad.

The finance minister reiterated the government's unwavering commitment to bolstering the energy sector and expressed confidence in PQEPC's significant role in meeting Pakistan's energy demands.

He emphasized the significance of collaborative efforts between Pakistani and Chinese companies in advancing sustainable and efficient energy solutions.

The meeting focused on various matters related to the power sector, including payments to energy producers and possible ways to resolve issues hindering timely payments.

Chinese power generation and transmission companies have been very concerned about outstanding dues of China-Pakistan Economic Corridor (CPEC) power projects that have surged over PKR 550 billion.

The Chinese side had also discussed this matter in June during a visit of Pakistan Deputy Prime Minister Ishaq Dar and Federal Minister for Planning, Development and Special Initiatives Ahsan Iqbal.

The PQEPC claimed that its total due amount has reached PKR 94.5 billion or $340 million with a delay of over six months which could be delayed even further.

Conversion to local coal

The Finance Division and PQEPC president also discussed matters related to the technical and financial feasibility of converting these projects to run on domestic coal, thereby reducing reliance on imported fuel.

The Chinese side was informed that the government was taking a number of steps to facilitate the transition, including the launch of a railway line to ensure smooth and effective transportation of local coal.

The finance minister also briefed the delegation on the structural reforms being undertaken by the government, particularly in the energy sector, and the ongoing privatization of power supply companies and state-owned enterprises (SOEs).

He assured the delegation of the government's steadfast commitment to providing all necessary support and taking swift action to overcome any challenges impeding the operation of these power plants.

In response, the PQEPC president expressed appreciation for the government's efforts in implementing energy sector reforms and thanked it for its continued support in reviving operations of the Port Qasim coal projects.

The finance minister also reaffirmed the government’s full commitment to honoring all obligations, particularly in government-to-government projects, and maintaining the sanctity of contracts in both letter and spirit. He expressed confidence that, through mutual understanding and cooperation, both sides could develop sustainable solutions to the core issues facing the power sector, ensuring its long-term viability.

The meeting concluded with an agreement to establish a working group comprising members from PQEPC, the Power Division, and the Finance Division.

This group will monitor progress on a day-to-day basis to ensure timely and effective implementation of the agreed-upon initiatives.