The experience of Chinese companies working on the ground in Pakistan has been far from pleasant. Most of the early China – Pakistan Economic Corridor investments were in the power sector.
The investments, however, created sizeable liabilities on the future cash flows of these projects, Indo Pacific Centre for Strategic Communications (IPSCS) reported.
According to the IPSCS report, most of the deals signed by Chinese companies with Pakistan entailed assurance of exorbitant rate of returns to the Chinese companies for their investments. Going through an economic crisis for most of the past five years, Pakistan never seemed comfortable in fulfilling these liabilities by making timely payments.
During a meeting with Pakistan Minister for Planning and Development Ahsan Iqbal in May 2022, 25 Chinese Independent Power Producers (IPPs) reportedly warned that they would be forced to shut down their operations unless an upfront payment of about Rs 300 billion is made to them, according to IPSCS.
During the same month, media reports were floating about the Chinese ambassador to Pakistan, Nong Rong acknowledging the reluctance of Chinese companies owing to delayed payments to IPPs, the rising exchange rates and “unhelpful behavior” of the National Electric Power Regulatory Authority.
Islam Khabar recently reported that, the ongoing financial crisis in Pakistan and the economic slowdown in China appear to have had bearing on the progress of the China-Pakistan Economic Corridor (CPEC) programme.
Not just is it causing delays but it has made the megaproject struggle for funds, reported Islam Khabar