Pakistan to reopen power deals

ISLAMABAD: Pakistan has assured the International Monetary Fund (IMF) that it will “strive” to reduce capacity payments to the China-Pakistan Economic Corridor (CPEC) power projects either by renegotiating deals or having loans rescheduled — a big concession that might prove to become costly.
Written assurance has been given in the Memorandum for Economic and Financial Policies (MEFP), which the IMF released on Friday as part of its combined staff level report of the 7th and 8th reviews of the Extended Fund Facility (EFF) programme.
“We are striving to reduce capacity payments, as we pay the arrears, either by renegotiating the PPAs [Power Purchase Agreements] or by lengthening the duration of bank loans,” wrote Finance Minister Miftah Ismail to the IMF in connection with the CPEC power projects.
Having opposed CPEC projects earlier, the new IMF report maintained that the second-phase of the CPEC investment could “pose a risk to debt sustainability” in Pakistan.
“In early 2022, new investments through the [CPEC], originally established in 2013, were announced. Although infrastructure in these second-phase investments could raise growth prospects, attendant contingent liabilities also pose a risk to debt sustainability,” read the report.
Contrary to the IMF’s argument, CPEC’s second-phase is crucial for Pakistan’s economic development and external repayments are made via enough export.-Agencies