ISLAMABAD: Economists and academia suggested that the government should expedite payments to the Chinese IPPs operating under the China-Pakistan Economic Corridor (CPEC). They maintained that the $62 billion CPEC project holds significant potential to uplift Pakistan’s economy and its second phase is contingent upon an uninterrupted energy supply.
In an exclusive talk to WealthPK, prominent economist and former chairman Board of Investment (BOI) Haroon Sharif said, “Payments to the Chinese IPPs need to be cleared immediately and the government must work vigilantly on the CPEC to gain its dividends. The repayment issue will resolve the energy supply problems facing the Special Economic Zones (SEZs) extensively.”
Commenting on the IPP repayments, Dr. Nadeem ul Haq, Vice-Chancellor Pakistan Institute of Development Economics (PIDE), said repayment to Chinese firms was essentially important to be cleared without any undue delay because the whole project of CPEC Phase-II was contingent upon the energy supplied by the Chinese firms.
“The Chinese government understands the global changing economic dynamics that have impacted Pakistan extensively, so delayed repayments is not a very serious issue. Pakistan has the potential to make payments, and the government has objectively convinced the Chinese firms recently in this regard,” he added.
Speaking at a seminar titled ‘Grand Economic Dialogue 2022’ recently conducted by the Institute of Policy Research Institute (IPRI), Minister for Planning, Reforms, And Special Initiatives Ahsan Iqbal said, “Certainly, dues have piled up because timely payments had not been made,” adding, “The government has agreed to set up a revolving fund to ensure timely clearance of dues to the IPPs under the CPEC.”
He further said more than 30 Chinese companies were operating under the flagship multi-billion-dollar CPEC in various areas including energy, communication, railways, and others, showing optimism that the repayments will be cleared to further enhance business cooperation between the Chinese firms and Pakistan.
It is noteworthy that the government authorities now plan to set up an Investment Facilitation Centre to offer One Window Operation to all Chinese investors. More than 135 Chinese companies are operating in Pakistan on the CPEC and other projects and top priority is being accorded to regaining the trust of those working on the schemes.
The CPEC power projects dues have jumped above Rs340 billion. A few months ago, Pakistan paid Rs50 billion to the Chinese IPPs but blocked another Rs50 billion besides backtracking on its fresh commitment to open the Escrow account. Significant steps are underway to uphold the cooperation, particularly on the CPEC project. However, it is important for Pakistan to engage with the Chinese IPPs regularly, as energy supply to the second phase of CPEC is a game-changer for the economic uplift of Pakistan.