Skip to main content

CPEC’s first power project mired in financial difficulties

Part of workin­g capita­l is stuck in circul­ar debt; rupee fall causes loss on coal import­

By Salman Siddiqui

Published: May 10, 2019

The power project has produced over 10 billion kWh of electricity since the first of its two power plants was synchronised in November 2017. PHOTO: FILE

KARACHI: The first-ever power project set up under the multibillion-dollar China-Pakistan Economic Corridor (CPEC) is facing financial trouble as some of its working capital is stuck in circular debt and it faces notable losses on the import of coal fuel in the wake of massive rupee depreciation.

Answering queries through a translator, Port Qasim Electric Power Company (PQEPC) Chairman Sheng Yuming said the circular debt in the power sector of Pakistan had remained a very challenging issue. His company, which operates two coal-fired power plants of 660 megawatts each, is also “facing the challenging problem of payment of arrears by Pakistan”.

We have around $150 million (over Rs21 billion) late payments now,” he said, while responding to media queries at first anniversary of the start of commercial operations of the imported coal-fired power project set up at a cost of over $2 billion. The project kick-started commercial operations on April 25, 2018.

Past five years of CPEC in review

The money stuck in circular debt is equal to about three-month sales revenue of the company, it is learnt. Pakistan’s circular debt stood at around Rs603 billion as of late March 2019.

The delayed payment of tariff is a big issue for us every day,” said Sheng, who is also the chairman of PowerChina Resources Limited – the parent company of PQEPC.

“We are trying our best to generate more power and get more tariff payment timely as you know that this is a power plant, we have to import coal from the international market, also we have to repay debt to the financing banks,” he said.

“Top officials of the National Transmission and Despatch Company (NTDC) and Central Power Purchasing Agency (CPPA) have tried their best to pay our tariff bill on time,” he revealed.

The power project has produced over 10 billion kilowatt-hour (kWh) of electricity since the first of its two power plants was synchronised in November 2017. The production came close to 10% of the entire nation’s power consumption in Pakistan, he estimated.

He said the rupee had continued to depreciate against the dollar for several months and it caused them notable losses on the import of coal – the fuel for power production.

“We have to cope with that (devaluation). To be frank, the devaluation against the dollar… has caused us a lot of losses,” he said.

The losses caused by currency depreciation cannot be transferred to Pakistan as per the agreement. “I believe the depreciation is a short-term and temporary trend (in Pakistan),” he said.

Pakistan has let the rupee depreciate by 34% to Rs141.3 to the US dollar since December 2017.

Rs24b from CPEC funds goes to MNAs’ schemes

“Coal comes to around 80-85% of the total cost of power production at the plant,” another company official told The Express Tribune on the sidelines of the event. “The rupee depreciation has wiped out our possible (net) profit in the first year of operations.”

Sheng said PQEPC was the first power project under CPEC. PowerChina Resources has been operating in Pakistan for the past 30 years and has undertaken several engineering projects. “This (PQEPC) was our first investment project,” he said.

Sheng pointed out that they were exploring new investment opportunities in Pakistan these days. “We are engaged in negotiations for new projects. However, no new project has been finalised yet.”

“PowerChina is looking for projects that are good for Pakistan including industrial parks,” he said.

Responding to a question on the impact of geopolitics on CPEC, Sheng called the China, Pakistan and Indian relationship a sensitive matter. “China did not invite Indian officials to its last Belt and Road Initiative (BRI) investment forum held recently in China and Pakistan Prime Minister Imran Khan led a delegation to visit China.”

“China and Chinese firms fully support economic development in Pakistan,” he said, adding the two neighbouring countries had remained all-weather friends.

Published in The Express Tribune, May 10th, 2019.


Popular posts from this blog

SSG Commando Muddassir Iqbal of Pakistan Army

“ Commando Muddassir Iqbal was part of the team who conducted Army Public School operation on 16 December 2014. In this video he reveals that he along with other commandos was ordered to kill the innocent children inside school, when asked why should they kill children after killing all the terrorist he was told that it would be a chance to defame Taliban and get nation on the side. He and all other commandos killed children and later Taliban was blamed.
Muddassir Iqbal has deserted the military and now he is  with mujahedeen somewhere in AF PAK border area”
For authenticity of  this tape journalists can easy reach to his home town to interview his family members or   ISPR as he reveals his army service number”
Asalam o Alaikum: My name is Muddassir Iqbal. My father’s name is Naimat Ali. I belong to Sialkot divison (Punjab province), my village is Shamsher Poor and district, tehsil and post office  Narowal. Unfortunately I was working in Pakistan army. I feel embarrassed to tell you …

CPEC Jobs in Pakistan, salary details

JOBS...نوکریاں چائنہ کمپنی میںPlease help the deserving persons...Salary:Salary package in China–Pakistan Economic Corridor (CPEC) in these 300,000 jobs shall be on daily wages. The details of the daily wages are as follows;Welder: Rs. 1,700 dailyHeavy Duty Driver: Rs. 1,700 dailyMason: Rs. 1,500 dailyHelper: Rs. 850 dailyElectrician: Rs. 1,700 dailySurveyor: Rs. 2,500 dailySecurity Guard: Rs. 1,600 dailyBulldozer operator: Rs. 2,200 dailyConcrete mixer machine operator: Rs. 2,000 dailyRoller operator: Rs. 2,000 dailySteel fixer: Rs. 2,200 dailyIron Shuttering fixer: Rs. 1,800 dailyAccount clerk: Rs. 2,200 dailyCarpenter: Rs. 1,700 dailyLight duty driver: Rs. 1,700 dailyLabour: Rs. 900 dailyPara Engine mechanic: Rs. 1,700 dailyPipe fitter: Rs. 1,700 dailyStorekeeper: Rs. 1,700 dailyOffice boy: Rs. 1,200 dailyExcavator operator: Rs. 2,200 dailyShovel operator: Rs. 2,200 dailyComputer operator: Rs. 2,200 dailySecurity Supervisor: Rs. 2,200 dailyCook for Chinese food: Rs. 2,000 dailyCook…

Historical relationship between Kurd and Baloch.

The Kurds are the ethnical group living in a region known as Kurdistan which is divided into Iraq, Syria, Turkey and Iran. They  are struggling for an independent region since decades and they are famous for their female guerrilla fighters.        On 25 September 2017, the referendum for an independent Kurdish region  was held in Iraq with a turn out of 72 %.   On this important occasion, the historical relation between Kurd and Baloch people is worth discussing.       When it comes to history, every nation tends to find its roots and origin. Same goes with the Baloch people. The Baloch people are always curious  about  finding their roots in history. Even if you  talk to a shepherd in Balochistan, he will be curious to talk about his  tribal or ethnical roots.      The Balochs have always conveyed the history to the next generations in different mediums like poems etc. No Baloch before 20th century had written books on  history  or origin of the Baloch nation .