Request Made for Rs48 Billion to Address CPEC Energy Debt
By
April 8, 2024
The energy ministry wants the government to give them Rs48 billion to pay off debts from energy projects in the China-Pakistan Economic Corridor (CPEC). But this amount won’t cover all the debt, which is already Rs487 billion.
The ministry asked for this money as part of its request for subsidies for the next fiscal year. They asked for a total of Rs1.234 trillion in subsidies, but the Rs48 billion for CPEC projects is only a small part of that.
Every year, the finance ministry will give money to pay off CPEC energy debts according to what the energy ministry asks for. They decided to give Rs48 billion each year, based on decisions made by government committees.
To handle these debts, the Pakistan Energy Revolving Account (PERA) was started in December 2022 with an annual Rs48 billion budget.
Chinese authorities are worried because Pakistan isn’t paying its debts on time. They even linked giving Pakistan more loans to paying off these debts.
Over the past 16 months, Chinese power plants billed Rs1.6 trillion, but Pakistan only paid Rs1.3 trillion of it. Pakistan is supposed to pay all the bills to these plants, but they haven’t been able to.
To fix this, Pakistan needs to pay Rs10 billion to Rs15 billion every month. But because of money problems, they can’t do that.
Overall, the circular debt in the power sector is a big problem, reaching Rs2.7 trillion. The government promised to keep it at Rs2.310 trillion by June 2024. If it goes over that, they’ll have to pay more or raise prices.
The energy ministry also wants Rs100 billion from the budget next year to help pay off other debts.
