ISLAMABAD/KARACHI: Islamabad has not yet engaged Chinese independent power producers (IPPs) operating in Pakistan on revising the terms of their multibillion-dollar contracts, the privatization chief said this week, contrary to recent statements from the power division that talks are underway as part of efforts to restructure the debt-heavy energy sector.
Successive governments in Pakistan have relied heavily on private power plants to end decades of electricity shortages, offering high guaranteed returns and capacity payments even if power goes unused. Some of these large plants were built and financed by Chinese firms after 2015 under the China-Pakistan Economic Corridor (CPEC). But a deepening economic crisis has slashed power demand in Pakistan, while the state remains locked into paying these fixed costs, pushing up consumer electricity bills and fueling public protests.
Amid pressure from the International Monetary Fund (IMF), whose loans are critical for Pakistan to avoid default, and from local industry demanding lower power costs, Islamabad has renegotiated some older IPP deals and announced plans to stagger debt payments to Chinese plants to gain budget breathing room and slow tariff hikes.
