End of CPEC? Chinese companies operating in Pakistan warn of shutting shop as dues pile up

Islamabad: Nearly 25 Chinese firms operating in Pakistan under the flagship CPEC have warned that they would be forced to shut down their operations this month unless payments worth Rs 300 billion is made up front to them, a media report said Tuesday.

The announcement was made the Chinese Independent Power Producers (IPPs) during a meeting presided over by Minister for Planning and Development Ahsan Iqbal with more than 30 Chinese companies operating under the flagship multi-billion-dollar China-Pakistan Economic Corridor (CPEC) in various areas including energy, communication, railways and others, the Dawn newspaper reported.

During the meeting the power producing companies brought up a slew of complaints regarding the payment of dues worth 300 billion Pakistani rupees (USD 15,95,920,800).

“There were also complaints, including those relating to complex visa procedures for Chinese executives, taxation and so on, but there were also counter complaints from the Pakistani side as well, on delayed responses to their communications,” the report said.

About 25 representatives from the Chinese IPPs spoke one after the other and complained about the buildup of their dues and warned that without upfront payments they would shut down within days.

According to the Chinese companies, while payments against power already supplied were not forthcoming and they had been financially handicapped due to the coronavirus spread, the tax authorities had started taxing them at higher rates.

“Also, the contractual requirement of a revolving fund for automatic payment of IPPs’ dues and subsequent promises by the previous government during former prime minister Imran Khan’s visit to China also remained unfulfilled,” the representatives were quoted as saying in the report.

Khan was removed as the prime minister of Pakistan last month through an anti-trust vote brought by the opposition parties.

Minister Iqbal has assured the Chinese companies that the prime minister had already taken notice of the situation and had asked the relevant authorities to brief him about the entire issue and make arrangements for early payments.

He promised that their financial difficulties would be eased out within the current month.

The companies are operating for the execution of the projects under the CPEC, which was launched in 2015.

The CPEC is a planned network of roads, railways and energy projects linking China’s resource-rich Xinjiang Uyghur Autonomous Region with Pakistan’s strategic Gwadar Port on the Arabian Sea.

PTI