Chinese coal power producers have shared their concerns with Prime Minister Shehbaz Sharif and proposed use of RMB by the Port Qasim coal-fired power plant to buy coal to release pressure on dollar, well informed sources told Business Recorder.
The overdue amount of Chinese coal-fired power plants is over Rs 350 billion due to which they are unable to buy coal – a commodity whose price has increased manifold. According to sources, Prime Minster has been informed that as a huge overdue amount is owed by CPPA (G) and with exchange restrictions implemented by SBP, three coal power plants do not have enough funds/ US dollars to purchase coal. Due to insufficient coal inventory, all these Chinese coal power plants are unable to run at full load. Chinese have claimed that all the coal power plants cannot generate electricity at full load due to less supply of coal but CPPA-G is deducting capacity payments, unreasonably. Power Purchase Agreement, (CPPA -G) has been requested to at least pay tariff in full and on time to procure the coal purchase funds, debt service repayment and other fixed cost every month.
As per Implementation Agreement (IA), State Bank of Pakistan (SBP) has been requested to meet exchange demand of each power plant on time to ensure that each power plant has enough foreign exchange to import coal. Chinese coal producers have requested Ministry of Energy that as per meeting of 30 May, presided over by the Prime Minister, CPPA-G be instructed to exempt the deduction of capacity payments and return the deducted part if the power plants are unable to purchase coal and generate electricity due to tariff payment problems and foreign exchange. Prime Minister has also been informed that Port Qasim project is able to use RMB to buy coal to support Pakistan’s pressure due to a shortage of US dollars, requesting SBP to support Port Qasim to exchange RMB. Chinese coal power plants have also requested Ministry of Energy and NEPRA to allow the additional cost of exchanging RMB to be passed through to CPPA-G.
Zhang Jun, Chairman Energy Investment of All-Pakistan Chinese Enterprises Association (APCEAP), in a letter to top government authorities, also accused the CCPA-G of breaching the provisions of agreements. Chinese power sector investors, saying huge amount of arrears, coupled with the accelerated depreciation of the PKR in recent years, has significantly reduced the nominal return on investment, which has exposed such Chinese enterprises to high audit risks in the future, besides greatly dampening the enthusiasm of other Chinese investors to invest in Pakistan. More than ten Chinese investors, who have invested in power projects in Pakistan, have established an Association, i.e., Energy Enterprise Association (EEA) on the pattern of Independent Power Producers (IPPs) and have shared their issues, concerns, demands and future proposals. Recently, Chinese investors, who invested in Gwadar, requested the government to allow them to maintain their bank account in RMB due to frequent depreciation of Pak Rupee. The EEA, in its letter stated that since 2014, the total investment made by Chinese enterprises in power projects under CPEC has reached $19.961 billion, with a total installed capacity of 10,876 MW of which 5,887 MW has already been put into operation. The annual power generation capacity of these power projects is 35.86 billion kWh, which accounts for one-third of the total power generation (about 130 billion kWh) of Pakistan’s main grid in recent years.
Source: This news is originally published by brecorder