Prime Minister Imran Khan’s upcoming visit to China is likely to help enhance investment in the power sector, revive Pakistan Steel Mills (PSM) and accelerate the relocation of industries to the Special Economic Zones (SEZs) under the China-Pakistan Economic Corridor (CPEC).
The primary aim of the visit is to seek $3 billion in loan to stabilise Pakistan’s dwindling foreign currency reserves and boost investment in various sectors of the economy. The premier may also ask his Chinese counterpart to roll over the loans taken by Pakistan for different projects including the energy sector under CPEC. The government of Pakistan has already settled its issues with the independent power producers (IPPs) by reducing the rate of return.
The present government believes that the Pakistan Muslim League-Nawaz (PMLN) leadership had awarded energy projects to China at a high rate of return. Pakistan took up the matter with China through diplomatic channels, however, Beijing refused to reduce the rate of return. Earlier, Chinese President Xi Jinping was scheduled to visit Pakistan, during which the government had planned to discuss the issue.
However, he has not yet arrived. In addition to these issues, PM Khan’s visit has also significant importance for Pakistan and China in the wake of instability in Afghanistan. According to the Foreign Office, the three-day trip will reinforce strategic ties between the two neighbours and further advance the objective of bringing both of them closer for mutual benefit. Imran Khan will also discuss future plans to enhance bilateral cooperation in the fields of investment, trade, information technology and exports. Besides showing solidarity with China at a time when its ties with the US and other Western countries are severely strained, Khan will look forward to expediting progress on CPEC including road, connectivity and power projects.
However, sources said that Pakistan would particularly seek support of China to ramp up investment in the energy space. “Seemingly, it is a good opportunity to advance the discussion on Shanghai Electric Power (SEP)’s interest in acquiring K-Electric as the deal has been at a standstill since 2016,” an official said. It is comparatively easier for the government to discuss matters pertaining to the power sector as it has made considerable progress on the lingering issue of Rs230 billion withheld payments to the Chinese power producers. So far, it has paid Rs50 billion while another Rs50 billion is expected to be paid next month.