Senate questions Rs22bn special fund for CPEC projects

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ISLAMABAD: A Special Senate Panel on Monday questioned the creation of a Rs22 billion power sector revolving fund as a special arrangement to make preferred payments to power producers and investors under the China-Pakistan Economic Corridor (CPEC).
According to a ‘Dawn’ report, Senator Shibli Faraz of Pakistan Tehreek-i-Insaf, who heads a special senate committee on circular debt, said he was not against CPEC but wondered whether it was discriminatory to open up another head to the circular debt by ensuring 22 per cent payments to these projects for which the government would need commercial borrowing.
Zargham Eshaq Khan, Joint Secretary Power Division, agreed that this would be a commercial borrowing at Kibor plus 4pc rate but there was nothing his division could do except to execute the government-to-government agreement between China and Pakistan under CPEC that entailed such a requirement.
He said the revolving fund had not been actualised so far and the Power Division had moved a summary in which it has explained to the cabinet that at the time of CPEC signing, the Chinese power projects were guaranteed to receive 22pc payments in case of 78pc recoveries. However, the recoveries have improved since then and shortfall had declined to 10-12pc so the amount should also be revisited accordingly.
“This number should be reduced in line with the actual shortfall,” he said, while advocating this in a summary to the Cabinet which has to be decided upon by the caretaker cabinet or the incoming cabinet of PTI, as the case may be.
National Electric Power Reg­ulatory Authority (Nepra) on Monday reported that distribution companies (Discos) of ex-Wapda were facing Rs170 billion annual loss due to theft and non-recoveries, leading to repeated recurrence of unmanageable circular debt as the government imposed Rs121bn surcharges a year on paying consumers.