By Staff Reporter
ISLAMABAD: The International Monetary Fund (IMF) on Thursday distanced itself from reports suggesting the fund seeks agreements struck with the power plants, built under the China Pakistan Economic Corridor (CPEC), revised.
“The IMF did not ask Pakistan to re-negotiate CPEC’s IPP (Independent Power Producers) contracts. These claims are simply untrue. Rather the IMF supports the government’s multipronged strategy to restore energy sector viability, which shares the burden of restoring viability across all stakeholders—the government, producers and the consumers,” said Esther Pervez Ruiz, the IMF’s Resident Chief in Pakistan stated in a statement.
The outstanding amount of circular debt for Chinese IPPs has ballooned to over Rs300 billion. In order to ease their financial hardship. Prime Minister Shehbaz Sharif recently approved Rs50 billion to clear part of the huge liability.
The ECC has also considered another repayment of Rs50 billion. The government is also mulling to make the Revolving Fund functional for clearing this debt.
The IMF, after going through the details of repayments to all IPPs, detected some unusual activity on the account of payment to the Chinese side. However, the IMF did not raise any more issues on that and the latest statement from the IMF’s resident chief would help both sides move closer towards striking a staff-level agreement.
Media reported on June 9, 2022 that the IMF side has expressed concerns over the outstanding repayments to Chinese Independent Power Producers (IPPs) under the CPEC. As the PM gave a nod to the release of Rs50 billion to the IPPs, the Fund is asking about the repayment schedule on this account.
On June 9, 2022, it was reported by some quarters of the media that the IMF had asked the government to renegotiate the CPEC energy deals before making payments of around Rs300 billion to the Chinese power plants, throwing a curveball at the country’s financial team.
The lender of the last resort was reported to have called on the government that the Chinese CPEC power plants should be treated as power plants established under the 1994 and 2002 power policies.
This demand followed China’s refusal in the past to renegotiate the terms of agreements with the independent power producers (IPPs).
Officials said the IMF had a hunch that the Chinese IPPs were overcharging Pakistan and by reopening the deals Pakistan could save billions.
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