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Chinese firms threaten to close operations in Pakistan over non-payment of dues totaling $1.5 Billion: Reports

Chinese authorities pointed out that coal prices have risen by 3-4 times and it was difficult to continue operations with the urgent need for 3-4 times greater liquidity

More than 30 Chinese companies working in Pakistan under the banner of CPEC (China-Pakistan Economic Corridor) have threatened to shut down operations in the country over non-payment of dues, reported Dawn.

In a meeting on Monday (May 9), about 25 representatives of Chinese independent power producers (IPPs) complained about outstanding dues to Pakistani Minister (Planning and Development) Ahsan Iqbal.

Complaints by the Chinese side also included high taxation, a hike in fuel prices, a complex visa process for Chinese executives, and constant pressure to maximize power generation. Highlighting ‘serious liquidity issues’, they said that it was impossible to meet peak summer needs.

The Chinese authorities pointed out that coal prices have risen by 3-4 times and it was difficult to continue operations with the urgent need for 3-4 times greater liquidity

“One of the power producers reported that it was operating at half capacity due to low coal stocks, but the authorities’ push to increase output could exhaust fuel stocks in a couple of days,” the report by Dawn pointed out.

Several Chinese firms, associated with the CPEC, pointed out that the power sector was left handicapped by the Covid-19 pandemic. Despite no forthcoming payments, the tax authorities had begun charging 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”, they further said.

The Chinese authorities reportedly expressed concern over the international competitive bidding required for the upcoming draft renewable energy policy. The Pakistanis on the other hand complained that the Chinese often do not respond to their communication.

The meeting lasted for over 3 hours during which Pakistani Minister Ahsan Iqbal assured to ease the financial difficulties within the month of May. He also assured that all issues pertaining to pending CPEC projects would also be resolved and had sought a detailed report on it.

Chinese workers and citizens in Pakistan feel insecure

Earlier, it was reported that the Chinese workers in Pakistan had expressed no confidence in the Pakistani security systems. The Chinese workers conceded that the Pakistani security systems were not able to protect them in their hour of crisis.

It is notable that China has made heavy investments in Pakistan in various infrastructure projects. Chinese workers and Chinese funds both constitute an important part of the projects, one of which is the China-Pakistan Economic Corridor (CPEC).

According to a report by The Dawn, senator Mushahid Hussain, chairman of the Senate Defence Committee, said, “The Chinese confidence in Pakistan’s security system’s ability to protect their citizens and their projects is seriously shaken.”

Mushahid Hussain led a Senate delegation to the Chinese embassy, earlier in May, to express his condole­nces over the loss of three Chi­nese lives in a suicide att­ack on their van on the university’s premises last mon­th. The Karachi University attack was the third instance this year when the Chinese citizens in Pakistan were directly attacked.

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