Over two dozen Chinese companies involved in Pakistan’s power generation sector as independent power producers have warned they will shut down their plants as the government has failed to clear their dues, totaling over $1.5 billion. Closure, if it comes, will exacerbate the crisis in the country’s energy sector. 

The development came after representatives of 30 Chinese independent power producers met Ahsan Iqbal, Pakistan’s planning and development minister, and said they would be forced to shut down operations if their dues would not be cleared this month, reported Dawn.

Significantly, the independent power plants were set up under the flagship multi-billion-dollar China-Pakistan Economic Corridor (CPEC) as part of the development of key infrastructure in Pakistan. Due to non-payment and the rising global price of coal, power companies are having liquidity issues.

Importantly, the government is pressuring them to maximize generation to meet peak summer needs. However, companies have conveyed that “this is impossible” in the wake of liquidity issues”.

Significantly, independent power producers—-most of them are Chinese—had earlier also come under scrutiny as the earlier government tried to renegotiate their contracts over the pricing issues. However, under pressure from the Chinese government, the move had failed to materialize. The earlier energy policies had also given the Chinese firms an undue advantage.

Chinese firms also raised objections to Pakistan’s new draft renewable energy policy, which, interestingly, calls for international competitive bidding—something the Chinese have been advocating in the Sri Lankan power sector, mainly to counter Indian influence.

A number of other projects under the CPEC are also having serious issues like security, funding, and prolonged delays in approval. Representatives of Chinese companies, who met with the Pakistani minister, have also complained about visa-related issues and taxation. 
(SAM)