The Asian country of Pakistan is already facing debt problems and now it seems like the problem has escalated. Its close ally China has refused to restructure its liabilities worth $3billion. Islamabad had earlier requested China to forgive the debt liabilities. China has helped to fund its energy projects that were a part of the China-Pakistan Economic Corridor. The debt is mostly for the development of independent power producers for the take-or-pay power generation contracts.
The total amount that has been invested is more than $19 billion. Media reports have claimed that China has opted to remain silent on the request from Islamabad to retalk about the agreements on power purchase. However, the country also has a reason as a relief in debt would mean that it would require the banks to make changes in the terms and conditions under which the credit was paid out. Beijing in response to the request said that China Development Bank and Export-Import Bank of China were not prepared to make any changes in the clauses of agreement that were earlier reached by the government.
The trouble does not end here as the Pakistan government owes nearly $158.9 billion to the domestic creditors out of which the public sector enterprises owe nearly $15.1 billion. Pakistan is currently in a sovereign debt which is the danger zone of total liabilities and debts that sums to $294 billion. The country had cried for help during the initial phase of the coronavirus pandemic when it had surrendered and asked for help during the lockdowns implemented in the country.
Nauman Wazir, the Pakistan Tehrik-e-Insaf Senator and industrialist while talking a leading daily alleged that the tariff that was determined by the National Electric Power Regulatory Authority while allotting power generation for the private sector was very high. He further said that erroneous declarations about the financial assets and operational costs of the company were submitted by the IPPs.
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