ISLAMABAD: Chinese investors have demanded that Pakistan place funds in offshore bank accounts to service debts incurred for setting up energy plants under the China-Pakistan Economic Corridor (CPEC).
Chinese investors have expressed doubts and asked Pakistani authorities ensure payments in offshore bank acoounts to avoid any possibility of default.
The Pakistani authorities have not yet accepted the investors’ demand, citing the country’s history of never defaulting on Chinese energy debt repayments, even during periods of critically low reserves. Islamabad is also cautious about potential reactions from the International Monetary Fund (IMF) to any new concessions to Beijing.
It was reliably learnt that the Chinese authorities were also pressing Pakistan to clear $125 million in dividends owed to Chinese firms operating in Pakistan.
Cabinet ministers and high-ranking government officials sit together to finalise Pakistan’s stance on these contentious energy-related issues.
Finance Minister Muhammad Aurangzeb urged caution in accepting any Chinese demands due to sensitivities surrounding upcoming bailout program talks with the IMF well palced sources revealed.
During a preparatory meeting ahead of the Joint Working Group (JWG) on Energy gathering in Beijing next week, it was also learnt that Governor of the State Bank of Pakistan (SBP) Jameel Ahmad raised these concerns. A Pakistani delegation is expected to depart for Beijing to participate in the JWG on Energy meeting by the middle of this month.
China has established energy projects in Pakistan with a 75% debt and 25% equity investment. The estimated value of these Chinese energy projects is nearly $21 billion, with Chinese debt for energy projects totalling around $16 billion. The country needs to make annual payments of about $2.4 billion toward debt and dividends.
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