IMF asks Pakistan govt to reopen CPEC deals

The global lender has asked the government to treat the Chinese CPEC power plants at par with the power plants established under the 1994 and 2002 power policies, highly placed sources told The Express Tribune.

All the plants were established under the CPEC framework agreement.

The IMF’s demand came after China’s refusal in the past to renegotiate the terms of agreements with the independent power producers (IPPs).

Sources told the newspaper that the IMF suspected that the Chinese IPPs might have been overcharging Pakistan and there was a need to reopen these deals.

The Mohammad Ali report on the IPPs had identified overpayment of about Rs 41 billion to the Chinese IPPs.

Top officials in the Ministry of Finance confirmed to The Express Tribune that the IMF had raised the issue of payments to the Chinese IPPs with their willingness to renegotiate the deals.

When contacted, Esther Perez, IMF’s Resident Representative, emphasised the need for equitable treatment of all power sector stakeholders due to the limited fiscal space.

“An important principle underpinning these (power sector) reforms is that all stakeholders contribute in an equitable manner to reduce the circular debt, between the government, IPPs and consumers, while protecting the most vulnerable consumers,” Perez told the newspaper.

She said that Pakistani authorities should be cognizant of the limited fiscal space available to clear any outstanding arrears of the sector stakeholders, and thus there should be a trade-off between this and other government priorities, and the potential to unlock lower capacity payments for electricity as part of the aforementioned burden sharing across stakeholders.