Pakistan Agrees to Change China’s Lending Agreement for Power Plants

Pakistan is apparently ready to modify the Pakistan Energy Revolving Account (PERA) to address Chinese lenders’ concerns over future payments to Independent Power Producers (IPPs) operating under the framework of the China-Pakistan Economic Corridor (CPEC).

Managing Director of the Private Power & Infrastructure Board (PPIB) Shah Jahan Mirza has shared a report on a PERA meeting, held earlier this month, with Chinese authorities requesting that they coordinate with CPEC IPPs, respective lenders, and Sinosure to obtain their acknowledgment of the Revolving Account arrangement, reported a national daily.

This will set off the next meeting, which will lead to the next meeting of the Joint Energy Working Group (JEWG).

Pertinently, the above-mentioned PERA meeting was attended by top energy officials on both sides. The Pakistani side requested that the Chinese lenders share their thoughts and comments on the Revolving Account Framework currently used by Pakistan in place of the Revolving Account Agreement (RAA).

The current scheme of payment is satisfactory for Pakistan since Rs. 50 billion has already been approved by the federal cabinet for onward payments to CPEC projects in the current financial year. It should be noted that the scheme allows the withdrawal of Rs. 4 billion from PERA on a monthly basis for payment to CPEC Projects.

Questions posed by Chinese lenders were addressed on technicalities such as the continuation of the current Revolving Account scheme, its operations and maintenance, tariff-related issues, and the amendments required to be incorporated in the Revolving Account Agreement.

The Chinese side was assured of the Government of Pakistan’s commitment to keeping the Revolving Account operational based on the consent of the lenders regarding the Revolving Account opened with the State Bank of Pakistan (SBP).

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