ISLAMABAD: The International Monetary Fund (IMF) has requested Pakistan's government to renegotiate the energy accords for the China-Pakistan Economic Corridor (CPEC) before making payments to Chinese power plants worth over 300 billion Pakistani rupees, placing Islamabad in a tight spot.
According to highly placed sources, the global lender has requested the government to treat the Chinese CPEC power facilities in the same way as the power plants built under the 1994 and 2002 power programmes were treated. The CPEC framework agreement allowed these plants to be built. China's refusal in the past to modify the terms of agreements with independent power producers prompted the IMF's demand (IPPs).
The IMF suspected that Chinese IPPs were overcharging Pakistan and that these agreements needed to be reopened. Overpayment of around 41 billion PKR to Chinese IPPs was revealed in the Mohammad Ali report on IPPs.
The IMF had raised the issue of payments to the Chinese IPPs with their willingness to renegotiate the accords, according to top officials in the Ministry of Finance. Because of the limited fiscal flexibility, Esther Perez, the IMF's Resident Representative, emphasised the importance of treating all power sector stakeholders fairly.
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