Rs50bn escrow account activated for payment of dues to Chinese IPPs

The government had to relax contractual conditions and shift about Rs50 billion worth of budgetary allocations for electricity subsidies to an escrow account for automatic partial payments to Chinese Independent Power Producers (IPPs) to pacify M/s Sinosure, a Chinese insurance company, into facilitating future projects in Pakistan. This was one of the key outstanding issues hampering the signing of new power projects as Sinosure had been reluctant for quite some time to provide insurance cover to Chinese investment in Pakistan. At least two major hydropower projects in Azad Kashmir with a combined capacity of about 2,000MW had been delayed for at least two years because of Chinese unease. Over the past two weeks, the ministries of planning, foreign office, finance and power had been engaged with the Chinese side in hectic consultations to “resolve pending matters related to IPPs under CPEC”, particularly those relating to the expedited settlement of delayed payments before Prime Minister Shehbaz Sharif’s ongoing visit to Beijing, sources in Power Division said.