Leading The Way For Chinese Investment In Pakistan.

Leading The Way For Chinese Investment In Pakistan.

ISLAMABAD: Prime Minister Shehbaz Sharif is reportedly proactively engaged in the resolution of issues facing the Chinese companies including those working in power sector projects under China Pakistan Economic Corridor (CPEC), well informed sources told Business Recorder.

Prime Minister Office, sources said, has convened a preparatory meeting on Monday (today) with all the concerned Ministries. PMO has asked the Ministries to provide a synopsis for the Prime Minister (one pager), a comprehensive brief and a copy of presentations and talking points.

Recently, Minister for Planning, Development and Special Initiatives, Ahsan Iqbal held a meeting with the Chinese companies and heard their concerns in the presence of senior officials of relevant Ministries and issued directions for their early resolution.

Official documents reveal that the following Chinese Companies complained about delays in payments by CPPA-G and NTDC: (i) 1320MW Sahiwal IPP;(ii) 1320MW Port Qasim IPP;(iii) 1320MW China Hub IPP;(iv) 660MW Engro Thar lPP;(v) 300MW Zonergy IPP;(vi) 100MW UEP Wind Farm;(vii) 50MW Dawood Wind Farm;(viii) 50MW Sachal Wind Farm;(ix) 100MW China Three Gorges Wind Farm; and (x) Lahore-Matiari HVDC Transmission Line.

The companies stressed that the increase in fuel prices had worsened their liquidity situation, forcing them to shut down their plants.

Power Division stated that 86 per cent of the bills had been paid and efforts were under way to make further payments to the IPPs.

Power Division will expedite action for payment of outstanding amount.

Insiders claim that the outstanding payables to Chinese IPPs have reached over Rs 350 billion.

Another key issue highlighted during meeting was the delay in opening of revolving account for CEPC IPPs. The following companies raised the issue stating that the non-fulfilment of this contractual obligation was creating difficulties for them: (i) 1320MW Sahiwal IPP ;(ii) 1320MW Port Qasim IPP;(iii) 1320MW China Hub IPP;(iv) 300 MW Zonergy IPP;(v) 660MW Engro Thar IPP;(vi) 100MW China Three Gorges Wind Farm.

The meeting decided that Power Division and Finance Division will expedite action for a final decision on opening of Revolving Account.

According to sources, Finance Division approached Power Division a couple of days ago and pressed for resolution of this issue pending since long.

The following project raised the mater of issues in Financial Close due to no clearance from Sinosure: (i) 1320MW TCB-1; (ii) 300MW Gwadar power plant; (iii) 700MW Azad Pattan HPP; and (iv) 1124MW Kohala HPP. It was decided that this matter will be raised with Chinese embassy.

On the issue of extension in LoS of Azad Pattan HPP and RCOD of 1320 MW TCB-1, the meeting decided that PPIB and CPPA-G Boards will consider the proposed extension of the LoS for Azad Pattan HPP in their upcoming meetings within a month’s time.

The following companies agitated the matter of increase of Sales Tax on imports from 0% to 17%o in Supplementary Finance Act 2021- 2022:(i) 700MW Azad Pattan HPP ;(ii) 1124 MW Kohala HPP;(iii) 884MW Suki Kinari HPP;(iv) I320 MW TCB-I;(v) 300MW Gwadar IPP;(vi) 330MW TEL;( and (vii) 330MW Thal Nova. Power Division has been directed to take this issue with the FBR.

The meeting decided that the issue of increase in WHT on local shareholders dividends for IPPs from 7.5% to 25 % will also be raised with FBR.

M/s China Hub Power 1320MW and Engro Thar Power Plant 660MW agitated the matter of raising tariff. NEPRA asked the companies to provide required information for final decision.

The following companies suggested that GOP may consider the central purchasing of imported coal for efficient negotiation; (i) 1320MW Sahiwal IPPs; (ii) l320MW Port Qasim IPP; and (iii) 1320MW China Hub IPP. Deputy Chairman Planning Commission (DCPC) stated that the suggestion may be considered by the relevant authorities.

M/s Pakistan Matiari-Lahore Transmission Line Company agitated that NTDC is in default to solve ROW of drainage outlet of Matiari Converter Station since last three years. Power Division will take up the matter with NTDC for resolution.

M/s Hydro China Dawood Wind Power Project agitated the issue of power curtailment due to single circuit 132KV single circuit transmission line instead of double circuit l32KV transmission line.

Power Division explained that Gharo Double Circuit 132KV Transmission Line is under construction. The issue will be settled after completion of this double circuit line.

The representative of CSCEC, the contractor for Multan-Sukkur motorway (M5), raised the matter of withholding of substantial amount by NHA on various grounds, which should be released without linking them to the issues pending with DAB.

Contractor has proposed amicable settlement of all claims/ disputes through Third Party instead of the lengthy arbitration/ legal process. Ministry of Communications will scale up its efforts to resolve the outstanding issues between NHA and the contractor. It was also decided that NHA and the contractor would hold a meeting within a week and proposed a way forward for amicable settlement as per contract.

The representative of CRBC, the Contractor of Havelian-Thakot, complained of contractual disputes between NHA and the contractor. Chinese Embassy and contractor have proposed that the matters pending with DAB since July 2020 may be resolved through amicable settlement, to avoid lengthy legal process.

The representative of CREC, the Chinese company nominated by Government of China as the lead for Mian Line-1, raised the matter of project cost approved by the Planning Commission, being lower than the cost worked out in the feasibility study. It was suggested that the project may be reviewed.

Commercial Councillor of Chinese Embassy in Pakistan was requested to take up the matter with NDRC & MoFCom for initiation of the bidding process and finalization of term sheet for financing of Package-l of the project.

The representative of CRBC stressed on the timely completion of the feasibility study of Realignment of KKH Phase-ll (Thakot-Raikot section) which will be merged to construction of dams. It was decided that the technical working group to finalize the ToRs of the feasibility study of project within one week. MoPD&S will convene a meeting under the chairmanship of the Minister to discuss the project in detail.

Multiple Chinese companies raised issues relating to delay in issuance of visas, as well as, problems relating to conversion of business visas into work visas for Chinese workers of CPEC projects.

Chinese companies were requested to share lists of their workers requiring conversion of business visas into work visas. Ministry of Interior (MoI) will process the case for permission to convert all such Business visas to work visas.

China Road and Bridge Corporation (CRBC) requested additional favourable policies for CPEC SEZs to make them more competitive in the region. However, BoI stated that incentives in place for SEZs are already competitive enough and more incentives will create discrimination for other investors.

CRBC, the Chinese company working on Karachi Coastal Comprehensive Development Zone Project (KCCDZ), requested signing of Investment Framework Agreement for the project so that the subsequent works could be carried out without any further delay.

BoI has been directed to hold a meeting with all stakeholders and submit a position paper to the Minister PD&SI.

COPHCL raised the issue of hinterland connectivity of Gwadar Port to make the port commercially viable with respect to KPT and Port and Port Qasim.

NHA will hold a meeting with COPHCL/ GPA and advise them of the possible economic transportation route for the cargo from Gwadar to up country.

COPHCL urged Government of Pakistan to import cargoes of Trading Corporation of Pakistan (TCP) through Gwadar Port. Ministry of Commerce informed that imports via Gwadar Port will add further costs which cannot be borne by TCP. Ministry of Commerce will hold a meeting with COPHCL/ GPA to assess the viability of import of TCP cargoes via Gwadar and suggest measures to increase its viability.

COPHCL raised the issue of exemption of Gwadar Free Zone from Foreign Exchange Regulation Act, l947. The proposal was presented directly to SBP by the Bank of China and COPHCL. Response on draft proposal for provision of commercial transaction of foreign currency (RMB) in Gwadar Free Zone will be obtained from SBP through Ministry of Finance.

Source

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Written by The Routine
CPECB Investor Magzine . Over CPEC and BRI Projects
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