Pakistani Power Minister Advocates Contract Revisions with Chinese Firms

Pakistani Power Minister Awais Leghari seeks to renegotiate power production contracts with Chinese firms, aiming for economic reforms and tariff reductions. Pakistan faces significant debt to China and anticipates benefits from revised terms including local fuel use. China and the IMF welcome reform initiatives.

Pakistani Minister for Power Awais Leghari has indicated a need to revisit existing contracts with Chinese power production firms, according to a report by US-based VOA on Sunday. Leghari pointed out that the terms and conditions for Independent Power Producers (IPPs) warrant another evaluation.

Pakistan has struggled with industrial growth, leading to significant wastage and massive power bills. Additionally, ongoing repayments of project loans have burdened the nation's finances. Local power plants also face similar contractual conditions as their Chinese counterparts.

Leghari revealed ongoing discussions with Chinese officials aimed at redefining sector debt and converting coal-fired plants to local fuel. Efforts to reduce electricity prices are underway, which could bring substantial benefits in terms of tariff reductions.

VOA reported that Pakistan owes over USD 15 billion to China-owned power plant operators and seeks to reschedule these payments to secure an IMF bailout. Last month, Pakistan reached a staff-level agreement with the IMF on a three-year USD 7 billion loan program.

Both China and the IMF are keen on seeing economic reforms in Pakistan, Leghari noted. Confidence in Pakistan's reform agenda could lead to better responses from these entities.

Quoting Pakistan's daily Express Tribune, VOA mentioned that Chinese firms have agreed to utilize local coal in three power plants, potentially saving Pakistan millions. However, concerns remain about possible demands for higher profits and insurance from weary Chinese investors.

Leghari dismissed these fears, asserting that the approach will benefit all stakeholders. Structural changes to infrastructure are necessary, as local coal is of inferior quality, but Leghari remains optimistic about future feasibility studies and discussions with investors.

Leghari assured that any decisions would be made with mutual consent, emphasizing the strong relationship between Pakistan and its investors.

(With inputs from agencies.)