Islamabad, July 16 (UNI) Pakistan 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, Express Tribune reported on Satruday.
The issue of reopening of 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. The previous PTI government had also made a similar commitment with the World Bank (WB) – for the sake of a $400 million loan in June last year.
The assurances seeking concessions from the Chinese investors was given by Pakistani authorities to remove one of the bottlenecks in finalisation of a staff-level agreement with the IMF, government sources told The Express Tribune, adding that they would try to renegotiate the CPEC deals. However, the chances of that happening are dim because of the political sensitivities involved in the process.
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. The sources said the government had assured the IMF that it would also try to explore the possibility of seeking an extension in debt repayments against the loans that Chinese investors had obtained from financial institutions in their country for setting up these plants.
One of the irritants in the conclusion of the staff-level agreement was that the IMF authorities were asking for clear commitments to reduce the power generation cost and the circular debt that had increased by another Rs850 billion during the last fiscal year.
The PTI government had also attempted to receive similar concessions – which the Chinese leadership refused to extend at that time.
The IMF has in the past also linked the outstanding energy payments to the Chinese power plants with the concessions that non-CPEC projects had extended to the previous government. Pakistan owes around Rs300 billion to the Chinese independent power producers (IPPs) and the IMF was keeping track of every payment made to them.
UNI ACL
