Citing power shortages in Pakistan amid rising coal prices as well as to contain inflation, "all-weather" friend China proposed the use of Renminbi (RMB) in the Port Qasim coal-fired power plant to buy coal to release pressure on the dollar.
China shared their concerns with Prime Minister Shehbaz Sharif as Pakistan is coping with severe power shortages amid extreme weather and high coal prices, reported Business Recorder.
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.
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, reported Business Recorder.
Chinese coal power plants have also requested the Ministry of Energy and NEPRA to allow the additional cost of exchanging RMB to be passed through to CPPA-G.
Chinese power sector investors, saying a 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, reported Business Recorder.
More than ten Chinese investors, who have invested in power projects in Pakistan, have established an Association, i.e., the 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 accounts in RMB due to the frequent depreciation of Pak Rupee.
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 the tariff in full and on time to procure the coal purchase funds, debt service repayment and other fixed costs every month.
As per the Implementation Agreement (IA), the 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 the Ministry of Energy that as per the meeting of May 30, 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, reported Business Recorder.
Zhang Jun, Chairman of 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 the agreements.
( With inputs from ANI )
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