Rs. 100B Released by Pakistan to Address Chinese Power Issues

In a strategic move aimed at strengthening bilateral ties with Beijing and addressing one of China’s longstanding concerns, the Government of Pakistan has released Rs100 billion to settle part of its outstanding dues to Chinese Independent Power Producers (IPPs).

This development comes just days before Prime Minister Shehbaz Sharif’s scheduled visit to China for the Shanghai Cooperation Organization (SCO) Heads of State meeting and an investment conference hosted by Pakistan’s embassy in Beijing

• Amount Released: Rs100 billion allocated to clear dues of Chinese IPPs

• Additional Funds: Rs8 billion separately allocated from routine budgetary provisions

• Objective: To reduce outstanding payments and improve relations with Chinese energy companies

• Timing: Disbursement comes just days before PM Shehbaz’s China visit

• Impact: Expected to strengthen energy cooperation under the China-Pakistan Economic Corridor (CPEC) framework

The payment is seen as a crucial step in ensuring the smooth functioning of CPEC power projects, many of which are run by Chinese IPPs. Over the past few years, mounting dues have raised concerns among Chinese investors regarding Pakistan’s ability to fulfill its financial commitments.

By clearing a significant portion of these payments, Pakistan aims to reassure Beijing of its commitment to the long-term success of CPEC and encourage fresh Chinese investments in the country’s energy and infrastructure sectors.

Prime Minister Shehbaz Sharif is expected to travel to Beijing later this week to attend the SCO Heads of State meeting. Sources indicate that the payment decision was strategically timed to create a positive environment ahead of high-level discussions with Chinese leadership.

During his visit, PM Shehbaz is also scheduled to attend an investment conference organized by Pakistan’s embassy, where officials will present new opportunities for Chinese investors in Pakistan’s energy, infrastructure, and technology sectors.

Pakistan’s energy sector has faced significant financial strain due to the circular debt crisis, with outstanding dues to IPPs contributing to investor uncertainty.

The Rs100 billion payment reflects Islamabad’s commitment to resolving energy-sector bottlenecks and boosting investor confidence, which is essential to attract further Chinese funding under CPEC Phase-II.

Analysts believe that this move will also facilitate new agreements on renewable energy, hydropower, and technology transfers during PM Shehbaz’s meetings with Chinese officials.

The Rs100 billion payment to Chinese power producers marks a major policy shift by the Government of Pakistan ahead of Prime Minister Shehbaz Sharif’s visit.

This timely step not only reduces financial liabilities but also sends a strong diplomatic signal to Beijing, reaffirming Pakistan’s commitment to CPEC, energy security, and sustainable economic growth.

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