$15.4b debt restructuring proposed

Days before Prime Minister Shehbaz Sharif’s visit to Beijing, Pakistan has prepared a new proposal to seek $15.4 billion in Chinese energy debt restructuring aimed at lowering energy prices for end consumers. The proposal involves spreading debt repayments over a longer period. This would, on one hand, reduce the outflow of foreign currency by about $550 million to $750 million per annum and, on the other hand, potentially decrease prices by Rs3 per unit, according to Pakistani authorities involved in the plan’s preparation. These authorities stated that the government seeks a five-year extension in the repayment of Chinese energy debt obtained for setting up 21 power projects under the China-Pakistan Economic Corridor (CPEC). However, due to the extension in repayment period, the country will also have to make an extra $1.3 billion payment to China, sources said.