In 2016, Pakistan approved the creation of a “revolving fund” that would effectively provide a sovereign guarantee for payments to CPEC independent power producers (IPPs). The fund would cover 22 percent of the estimated monthly payments and capacity charges owed to CPEC IPPs (presently around $410 million) to ensure timely payment. The fund was apparently never created and now Chinese companies are lobbying once again for its formation. The federal government’s Power Division has recommended that Islamabad either take out a loan from commercial banks to provide a sovereign guarantee or that the Water and Power ministry’s holding company, Power Holding Private Ltd., secure the loan. The issue of the revolving fund also contributed to the slow pace of progress of the $2 billion high-voltage direct current transmission line from Lahore to Matiari.

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Posted by CPEC Wire Staff

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