CPEC power plants owed Rs 498 billion by CPPA-G, Port Qasim and Sahiwal Rs 159 billion

Power plants built under the China-Pakistan Economic Corridor (CPEC) are owed about Rs 498 billion by the Central Power Purchasing Agency (CPPA-G), the state buyer of electricity, Business Recorder reported on 19 October, citing well-informed sources. CPPA-G cannot clear the amount because it is short of money, the paper said, and the matter has reached the Prime Minister's Office more than once.

The two biggest claims

Port Qasim, Rs 79 billion. Port Qasim Electric Power Company runs a 1,320 MW coal plant near Karachi. In a 29 September letter to the finance, planning and power ministries, its chief executive Wang Dongfeng put overdue receivables at Rs 79 billion ($285.4 million), with some payments more than six months late. The company warned that longer delays could threaten generation and trigger defaults under its loan agreements and the government's sovereign guarantee. Its Chinese and Qatari sponsors are said to be unhappy. The company also argued that its energy price is lower than oil and RLNG plants, so paying it on time is in the system's own interest.

Sahiwal, about Rs 80 billion. China Huaneng's 1,320 MW coal plant in Sahiwal is owed about Rs 80 billion, sources told the paper. The company has asked the Prime Minister's Office to step into a dispute with CPPA-G over deductions from capacity payments that has run for about four years, and has accused officials of pushing a "give-and-take" settlement as a condition for paying.

The two plants together account for roughly Rs 159 billion. Business Recorder did not break down the rest of the Rs 498 billion.

Why this matters for your bill

The unpaid sum is part of the power sector's circular debt: distribution companies do not collect enough from consumers, CPPA-G cannot pay generators in full, and generators fall behind with fuel suppliers and lenders. Governments have tried to close that gap by adding surcharges and adjustments to electricity bills, and by negotiating with plant owners.

Late payments also cost money in their own right. Power purchase agreements usually charge interest on overdue amounts, and that cost eventually lands in tariffs. For CPEC plants the dispute also touches relations with Chinese lenders and the investment climate.

For households, the practical point is that pressure on tariffs is not easing. To see what a change of a rupee or two a unit does to your own bill, run your units through our electricity bill calculator, and read our report on the November fuel adjustment request.

What to watch

• Whether the finance ministry releases funds to CPPA-G for CPEC plants.
• Any formal default notice under the loan agreements or the sovereign guarantee.
• A settlement of the Sahiwal capacity payment dispute.