PQEPC threatens to suspend plant operations
ISLAMABAD: Port Qasim Electric Power Company (Private) Limited (PQEPC) has warned Islamabad that it may suspend plant operations without imposing liquidated damages (LDs) as payment has been delayed beyond the agreed deadline, well-informed sources told Business Recorder.
The outstanding receivables of coal-fired plants established under the China-Pakistan Economic Corridor (CPEC) still amount to around Rs 300 billion (over a billion dollars), which has caused power companies to be unable to remit dividends to their shareholders. The issue of outstanding dues for CPEC power projects remains at the top of the agenda for both Pakistani and Chinese authorities and is a major hurdle in the approval of new loans and insurance.
Sources revealed that Finance Minister Senator Muhammad Aurangzeb has been approached for the release of funds to the Central Power Purchasing Agency-Guaranteed (CPPA-G) for onward payment to Chinese Independent Power Producers (IPPs).
In a letter, CEO Wang Dongfang stated that under the guidance of the Government of Pakistan, the 1320 MW Port Qasim Coal-fired Power Project, acting as a leading energy project under CPEC, has consistently provided the cleanest, most reliable, and economical electricity to the national grid, and has made significant efforts in controlling circular debt throughout the COVID-19 pandemic.
According to him, the total payment due for the project has reached Rs 93.5 billion (approximately $334 million) as of February 26, 2025, with a payment delay of over six months, and this could escalate further.
In this context, the project’s shareholders/sponsors from China and Qatar have expressed significant discontent and are requesting immediate action to reduce the outstanding amount. The CEO further stated that the current due amount entitles PQEPC to suspend plant operations according to PPA Section 9.10, without any Liquidated Damages.
He claimed that PQEPC has a comparative advantage in the EPP tariff compared to other oil and RLNG power plants. A suspension of the project would result in a lose-lose situation, which both sides should strive to avoid. Therefore, the timely settlement of the due amount is urgently required to ensure sustainable power generation and prevent a Loan Agreement Default and a GoP Sovereignty Guarantee Default.
After outlining the background, the CEO of PQEPC requested the Finance Minister to coordinate with the relevant authorities to provide financial support to CPPA, enabling them to pay off the outstanding amount as soon as possible.
Sources further indicated that the Finance Division has released about Rs 18 billion to CPPA-G for subsidies related to the Inter-Disco Tariff Differential for FY 2024-25, subsidies for agricultural tubewells in Balochistan, AJ&K, and the 23rd tranche under the Pakistan Energy Revolving Account, meant for Chinese IPPs.—MUSHTAQ GHUMMAN
