Negotiations to refinance $3 billion in CPEC debt have begun. Pakistan and China have begun discussions on a $3 billion loan rollover for the China-Pakistan Economic Corridor (CPEC). According to Khalid Mansoor, a prime minister’s advisor, they have also agreed to hold a long-delayed meeting of the CPEC strategic committee.
Announcing a delay in holding the CPEC Joint Cooperation Committee’s (JCC) 10th meeting and Pakistan’s uneasiness with future loan payments for CPEC energy projects sent mixed messages about the government’s commitment to the multibillion-dollar strategic endeavour.
For the debt restructuring of CPEC energy projects, “conversations with Chinese authorities have begun to achieve a win-win situation,” Special Assistant to the Prime Minister on CPEC Affairs Khalid Mansoor stated during his first press conference.
He maintained Pakistan’s commitment to paying payments on Chinese energy sector investments.
According to a diplomatic source, debt rescheduling discussions were in their infancy.
Mansoor took over as Pakistan’s CPEC point person from Asim Saleem Bajwa last month. However, Mansoor has not been notified of his appointment as head of the CPEC Authority.
In May, Special Assistant to the Prime Minister on Power and Petroleum Tabish Gohar told The Express Tribune that the government would persuade China to roll over about $3 billion in immediate loan repayments to 12 Chinese independent power producers due in three years. Negotiations to refinance $3 billion in CPEC debt have begun
Gohar stated that Pakistan would seek a 10- to 12-year deferral of the $3 billion repayments, which would result in a Rs1.50 per unit reduction in the tariff rise requirement.
China has built 12 power plants as part of CPEC, and Chinese debt repayment is included in electricity bills. They will be paid in rupees by consumers and repaid in dollars by the government.
Debt payments are required on various projects, including the Kohala hydropower project, the Karot hydropower project, the Suki Kinari power project, the Port Qasim power project, the Sahiwal power plant, the Hubco power plant, and the Engro power generating project. Negotiations to refinance $3 billion in CPEC debt have begun
Along with the $3 billion in principal payments, the next three fiscal years will see $1.5 billion in dividend payments.
In comparison to the $19 billion in inflows, the expected outflows from CPEC power projects are over $31 billion over a 20-year timeframe for dividend and debt repayments, according to December 2018 planning and development ministry documents.
Read more with EL news : A multinational company signs a power deal with an Islamabad real estate project
They had arranged Commercial financing at a rate of 4.5% for the construction of power plants. According to Mansoor, the Chinese embassy had communicated September 23 and 24 as the JCC’s tenth meeting dates.
China abruptly postponed the 10th JCC conference in July this year following the death of nine Chinese people in an incident. Negotiations to refinance $3 billion in CPEC debt have begun
The tenth JCC meeting is considered crucial for re-energizing CPEC, ensuring the effectiveness of the CPEC Long-Term Plan 2017-30, and resolving concerns confronting Chinese enterprises working on CPEC projects, such as a delay in clearing their power generation dues.
The 10th JCC meeting’s agenda also includes the provision of security for Chinese people and CPEC assets. The JCC meeting has been rescheduled after an almost two-year hiatus.
Both parties will address all obstacles that have slowed CPEC’s progress over the last three years. Seven years ago, the initial phase of CPEC selected a total of 27 projects for development, 17 of which were fast-tracked and ten of which were prioritized.
The fast-track projects were scheduled to be completed within the first year.
However, seven years into CPEC, just four of the seven fast-track projects have been completed, while the remaining six continue.
The federal government blames Covid-19 for the delayed progress of CPEC projects, while observers believe the Pakistan Tehreek-e-Insaf (PTI) administration intentionally put CPEC on hold.
CPEC has so far attracted $25 billion in investment, including $13 billion in finished projects, according to Mansoor.
He stated that the remaining $12 billion in projects would be completed in one year, implying a four-year delay compared to their initial schedules.
The SAPM stated that he has attempted to settle concerns affecting Chinese investors over the last two months. He said that Chinese firms had invested $845 million over the previous three years.
Keep up with Estate Land Marketing for news and updates.