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CPEC Projects are still Stalled due to Unsolved Issues, Chinese Investors get Suspicious

Islamabad, Pakistan, 10/23/2021 / Islamabad News Bureau /

The government has missed yet another of its self-imposed deadlines for resolving difficulties impeding development on the first-phase projects of the China-Pakistan Economic Corridor (CPEC), thereby increasing suspicion among Chinese investors.

The 3rd meeting of the Pak-China Relations Steering Committee assessed the status of CPEC projects and discovered that the bulk of its orders issued in the 1st week of August had gone unimplemented.

Asad Umar, Federal Minister for Planning, Development, and Special Initiatives, presided over the meeting.

According to those who attended the meeting on Wednesday, the steering committee’s directives were not carried out by the Ministry of Energy.

The government set the end of August as the deadline for the Power Division to develop a strategy to cope with the delay in starting commercial operations of 5 CPEC power projects totaling 3,600 megawatts.

To settle the issue, the Ministry of Energy was ordered to submit the policy to the Cabinet Committee on Energy.

“The Power Division informed the committee that proposals for the extension of commercial operation date (COD) of six power projects were under process and the matter will be discussed in the upcoming meeting of CPPA board,” said a statement released by the Ministry of Planning following the meeting.

Due to the general slowing of construction on CPEC projects, Covid-related delays, and strikes at some sites, the projects are falling significantly behind their agreed-upon commissioning deadlines with the government of Pakistan and Chinese investors.

In the event of a power producer’s delay, the project sponsors are generally threatened with penalties. However, the delay is partially attributable to policy decisions made by the government.

These power projects have been delayed: the 884MW Suki Kinari Hydropower Project, the 720MW Karot Hydropower Project, the 330MW Tel project at Thar block-II, the 330MW ThalNova Thar block-II, and the 1,320MW Thar block-I.

The Suki Kinari project will be delayed for at least 10 months; the Karot project will be delayed for four months; the Tel Thar project will be delayed for one year; the ThalNova project will be delayed for 15 months; and the Thar block-I project will be delayed for at least one year.

Chinese investors have long complained about Pakistan’s inability to resolve difficulties. The 10th meeting of the CPEC Joint Cooperation Committee (JCC) raised hopes that Pakistani authorities would soon begin resolving those issues; nevertheless, the committee proceedings indicated that things were still progressing at an abnormally sluggish pace, much to the chagrin of Chinese investors.

A disagreement over imported coal handling costs has remained unsolved between Sahiwal Power Plant and the Port Qasim Authority.

According to the September 2016 implementation agreement, the PQA is charging on a minimum quantity of 3.5 million tonnes of imported coal, while the National Electric Power Regulatory Authority (Nepra) is only adjusting 3.2 million tonnes of coal as a pass-through item. This has added to the strain on the Sahiwal power plant.

The conference was informed that the question of either amending the implementation agreement or allowing other importers to utilise the empty berth space remains unresolved. The facility is also experiencing difficulties as a result of the government’s failure to make power purchase payments on time.

The difficulties in obtaining visas for Chinese people remained unsolved, and a spokesman of the Ministry of Interior first claimed that the ministry had not received any correspondence in this respect.

However, the problem of the 660 KV HVDC Matiari Lahore Transmission Line’s Right of Way (RoW) near Karachi has been rectified, and electricity is currently being evacuated over the transmission line, according to the Ministry of Planning.

The committee was also informed on the Suki Kinari Hydropower Project, which has an installed capacity of 880 MW. The Khyber-Pakhtunkhwa (K-P) government raised the sales tax on construction services from 1% to 2%, which Chinese investors claimed was not in line with other similar projects. According to the sources, this matter is still ongoing.

Asad Umar instructed the K-P administration to address the project’s operational difficulties as a matter of priority.


Source: Submit123News

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