In efforts to minimize financial and economic difficulties, cash-strapped Pakistan has requested China to ease the payment obligations of over USD 30 billion in power projects under the China-Pakistan Economic Corridor (CPEC).
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Linking Pakistan’s Pakistan’s strategic Gwadar Port on the Arabian Sea and China’s resource-rich Xinjiang Uyghur Autonomous Region, the CPEC is a planned network of roads, railways, and energy projects.
Launched in 2015 when Chinese President Xi Jinping visited Pakistan, it now foresees an investment of over USD 50 billion in different projects. As Pakistan’s circular debt liabilities crossed Rs 2 trillion (over USD 11 billion), the relaxation in payments comes as a part of efforts the country is making to secure discounts and savings on power purchases from independent power producers reports the Dawn.
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A Cabinet member, based on anonymity, said the Chinese leadership had advised the National Development and Reforms Commission (NDRC) of China to discuss the matter with the financial institutions (mostly owned by the government). He said the matter could move forward under the aegis of the CPEC’s Joint Working Group (JWG) on Energy before taking a clear shape.
Pakistan’s capacity payments alone were estimated to be closer to Rs 600 billion (USD 3.5 billion) this year and the member brought up about the time Pakistan had formally taken up the issue with China during the recent visit of President Arif Alvi to Beijing.
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Among the others who were present during the presidential delegation to China on March 17 were foreign Minister Shah Mehmood Qureshi and Minister for Planning, Development and Special Initiatives Asad Umar, who also heads the Cabinet Committee on Energy.
The real problem was addressed by Pakistan PM Imran Khan who said the capacity payments could go beyond Rs 1.5 trillion in a few years, which would be beyond the repayment capacity of the people.
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After a meeting with Chinese Ambassador to Pakistan Yao Jing, Adviser to the Prime Minister on Finance and Revenue Abdul Hafeez Shaikh said ” Pakistan looks forward to Chinese support in dealing with this unprecedented situation arising out of this (COVID-19) pandemic.” in an official statement.