Chinese IPPs face Rs500bn in unpaid dues

Business Recorder

3 days ago

ISLAMABAD: Chinese Independent Power Producers (IPPs), established under the China-Pakistan Economic Corridor (CPEC) framework, are still grappling with delayed payments, with total outstanding receivables having reached approximately Rs 500 billion ($1.72 billion). Of this amount, Rs 450 billion ($1.5 billion) is owed by the Central Power Purchasing Agency-Guaranteed (CPPA-G), which has been unable to clear the dues due to ongoing financial and foreign exchange constraints.
The Chief Executive Officers (CEOs) of various Chinese coal-fired IPPs—including Port Qasim, China Hub, and Sahiwal power plants—as well as wind power projects, have repeatedly written to authorities requesting payment clearance. However, the responses received have reportedly left them dissatisfied.
Similarly, the National Grid Company (formerly NTDC) has failed to clear overdue payments owed to the 660 MW Pak Matiari–Lahore Transmission Company (Pvt.) Ltd. (PMLTC).
Overdue payment issue: PQEPC threatens to suspend plant operations
Recently, PMLTC President and CEO, Xiong Feng, addressed a letter to the Managing Director of the National Grid Company. In the letter, he referred to the legally binding Transmission Services Agreement (TSA) signed on May 14, 2018, specifically highlighting Section 9.5 (Payment), which stipulates that invoices must be paid within 30 days of receipt.
'Despite these explicit terms,' the CEO noted, 'NGC (formerly NTDC) is still in the process of settling the invoice for December 2024, which became overdue on January 31, 2025. In addition, invoices for January, February, March, April, and May 2025 remain outstanding and unpaid. 'As a result, the total amount payable to PMLTC under the TSA has ballooned to Rs 55.071 billion (exclusive of sales tax), with Rs 47.076 billion now long overdue, including interest on delayed payments.
'We have repeatedly emphasized the critical importance of making full and timely payments under the TSA,' Mr. Xiong wrote. 'PMLTC must meet various operational costs necessary for the continuous and stable operation of the HVDC project.'
The letter further states that PMLTC has suffered financial losses and other negative consequences due to NGC's continued defaults in meeting its payment obligations. It calls on NGC to take immediate corrective measures, indemnify the company, and prevent further losses.
'In light of the prolonged delays and the extremely low rate of daily payments in recent months, we request NGC/CPPA-G to accelerate payments under the outstanding invoices by increasing the daily payment rate,' the CEO urged. 'Strict adherence to the payment terms of the TSA is crucial to avoid disruptions in the HVDC project's operation.'
According to sources, the Government of Pakistan may release some payments to Chinese IPPs ahead of Prime Minister Shehbaz Sharif's expected visit to China in August or September 2025. Currently, Rs 5 billion has been disbursed to Chinese IPPs through an Escrow Account established following extensive negotiations with Chinese stakeholders and the government.
Copyright Business Recorder, 2025