Chinese companies are reluctant to engage in the second phase of the China-Pakistan Economic Corridor due to the Pakistani government’s failure to meet payment deadlines, Business Recorder reported.
Overdue payments and delays are discouraging Chinese investors and companies from continuing work on the China-Pakistan Economic Corridor (CPEC) projects, according to interviews with officials and discussions at a recent meeting of the Pakistan-China Joint Working Group, as well as other available documents.
Sources stated that the Chinese power companies are to be paid about Rs. 220 billion. These companies had sent several formal letters and notices to the concerned authorities but in vain.
“Investors have established plants for profit and if they do not get a return on equity, then they will not be able to declare dividends,” sources told Business Recorder.
Interviews with officials revealed that the government is attempting to stagger the amount it owes and is likely to use the formula used to pay other independent power producers — in two installments of 40 percent and 60 percent.
Recently, a Chinese company that is constructing a 720-MW Karot Hydropower Project Company Limited sought an extension of time due to the pandemic. The government has not approved its requests despite its numerous efforts to secure an extension. If the company is denied an extension, its lender will not approve the disbursement of loans.
The company claims that it has already conveyed through letters that it urgently needs an interim/tentative EoT as the lender requires it for the disbursement of the loan. Its CEO, Wang Minsheng, said that without an extension, the company will not be able to make payments to contractors, and will suffer significant financial losses.
