Pakistan has assured the International Monetary Fund (IMF) that it would try to receive concessions from the China-Pakistan Economic Corridor (CPEC) power plants in the shape of either reduction in the profit rates on investment or rescheduling the loan repayments, the media reported.
The assurance to seek concessions from the Chinese investors was given by Pakistani authorities to remove one of the bottlenecks in the finalization of a staff-level agreement with the IMF.
Pakistan had informed the global lender that it would try to renegotiate the CPEC deals. However, the chances of that happening are dim because of the political sensitivities involved in the process.
Read more: CPEC: A ray of hope for Balochistan development?
Therefore, the issue of reopening the purchase agreements of the power generation plants set up under the multi-billion dollar CPEC is unlikely to die down in the near future. Furthermore, CPEC is the flagship project of the Belt and Road Initiative of the Chinese government – a reason that the Chinese leadership has already ruled out the possibility of reopening these deals.
Pakistan has assured the IMF that it would try to receive concessions from the CPEC power plants in the shape of either reduction in the profit rates on investment or rescheduling the loan repayments. PTI Govt had given same commitments to World Bank 👇 https://t.co/xXr75Nquwb
— Shahbaz Rana (@81ShahbazRana) July 16, 2022
IMF did not ask Pakistan to reopen CPEC energy deals?
Earlier, it was reported that the IMF asked Pakistan to reopen the CPEC deal ahead of payment to Chinese power plants. To clarify, Pakistan has more than Rs300 billion in stuck-up dues. More than two dozen Chinese firms operating in Pakistan warned that they would be forced to shut down their power plants unless payments were made upfront.
Therefore, it was reported that the IMF suspected that the Chinese independent power (IPPs) producers may be overcharging Pakistan and there is a need to reopen the deals. On the other hand, IMF rejected the claim that it asked Pakistan to renegotiate contracts with Chinese IPPs.
Read more: Chinese companies warn of shutting down power plants in Pakistan
“The IMF did not ask Pakistan to renegotiate CPEC IPP contracts. These claims are simply untrue. Rather, the IMF supports the government’s multi-pronged strategy to restore energy sector viability which shares the burden of restoring viability across all stakeholders: the government, producers, and consumers,” Esther Perez Ruiz, IMF’s Resident Representative for Pakistan stated.