Ahead of payment to China, Pakistan asked to renegotiate CPEC deal

Islamabad, Jun 9: The IMF (International Monetary Fund) has put Pakistan on tight spot by asking it to renegotiate the China Pakistan Economic Corridor ( CPEC ) energy deals before making payments of around Pakistani Rs. 300 billion, to the Chinese power plants.

 

 

 

 

The global lender, IMF, has asked the Pakistan govt to treat the CPEC Power Plants at par with the power plants established under the 1994 and 2002 power policies. These plants had been set up under the CPEC framework agreement. The IMF's demand came after China's refusal in the past to renegotiating the terms of agreements with the independent power producers.

 

 

 

 

 

The IMF suspected that the Chinese IPPs might have been overcharging Pakistan and that there was a need to reopen these deals. The Mohammad Ali report on the IPPs had identified overpayment of about Pakistani Rs. 41 billion to the Chinese IPPs. The IMF had raised the issue of payments to Chinese IPPs with their willingness to renegotiate the deals.

 

The IMF has emphasized the need for equitable treatment of all power sector stakeholders due to the limited fiscal space. An important principle underpinning these power reforms is that all stakeholders contribute in an equitable manner to reduce the circular debt between the govt, IPPs and consumers while protecting the most vulnerable consumers. It was also pointed out that a number of partners of Pakistan, including the World bank and IMF, were supporting these reforms.