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PM’s upcoming China visit: Chinese investors want high-level parleys - Inside Financial Markets

PM’s upcoming China visit: Chinese investors want high-level parleys

– Business Recorder

ISLAMABAD: Chinese investors in Pakistan’s energy sector, who are facing bottlenecks, have urged Islamabad to resolve issues of existing project sponsors to attract more investment in the country, well informed sources in Board of Investment (BoI) told Business Recorder.

Chinese investors, who are visiting different ministries/ organisation for years for resolution of their procedural issues, have conveyed this message to the Government of Pakistan, through Minister for Energy Hammad Azhar, Secretary Power Division and Chairman Board of Investment (BoI) days before the official visit of Prime Minister Imran Khan to China, scheduled for 3-5 February 2022 for top level engagement with the Chinese leadership.

“To give positive signal for attracting future private sector investments in Pakistan, nothing will convey Pakistan’s desire more strongly than to support project sponsors who are on ground and have already invested substantial funds,” said Wu Zefeng, the Project Director of Ashkot HPP, in his letter.

According to the Power Company, 300MW Ashkot Hydropower project Ashkot HPP, was issued letter of Interest (LoI) on June 6, 2012 by the Government of Azad Jammu & Kashmir (GoAJ&K), Private Power Cell. However, due to layout optimization during feasibility study, and consequent increase in the generating capacity of the project from 40MW to 300MW, the project was transferred from GoAJ&K to PPIB for further processing and development.

PPIB Board duly acknowledged and accepted the development of the project in a meeting held on November 14, 2018. The sponsors of project are willing to finance and invest US$ 600 million for development of this hydro plant. The project will not only provide cheap and renewable energy but secure Pakistan’s water rights to the Neelum River to the extent of water usage in power generation of this project.

PM to interact with private sector during China visit

In this respect the Company has requested that the matter of development of 300MW Ashkot Hydropower Project, through investment by the Chinese sponsors on fast-track basis, be included as an agenda item for high level interaction and discussion with the Chinese authorities to affirm foreign investment in the crucial area of AJ&K where other investor/ lenders and multilaterals including IFC, ADB, etc., have declined to fund due to being disputed territory.

Earlier, in a letter to Managing Director, Private Power & Infrastructure Board (PPIB), Zefeng had expressed his concern on slackness of Government of Pakistan in facilitating hydropower projects, which are in “circular trap” due to non-finalization of Indicative Generation Capacity Expansion Plan (IGCEP).

The selection criteria for IGCEP 2030, as given in Section 5-2(8), is that the project will be considered as “committed” if it has obtained Letter of Support (LoS) as on December 2020 for private sector projects. There is no bar on issuance of LoI, an inherent implication in IGCEP is that all processes, prior to issuance of LoS, should be allowed to be completed. Thus all projects should be issued LoI, and get their feasibility studies approved and get tariff determination from NEPRA.

“At present projects are in a circular trap because development is stopped at PPIB and all other government levels as IGCEP has not been approved by them, whilst IGCEP will not consider them until they reach the requisite development milestones. Such projects, especially hydropower with a long gestation period of 15-20 years, will always be stuck in doldrums and never see the light of day which is illogical and counterproductive,” Zefeng maintained. Chinese projects which are already on ground are facing problems in insurance of their loans from Chinese insurance company M/s Sinosure, due to huge energy sector circular debt of about Rs 2.5 trillion.

Syed Zaki Hussain

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