ISLAMABAD: In another major development, two Chinese imported coal-fired power plants have threatened approach London Court of Arbitration (LCA) against government’s endeavour to reduce their tariff through National Electric Power Regulatory Authority(NEPRA).
This threat came from Chief Executive Officer (CEO), Port Qasim Electric Power Company (Private) Limited (PQEPCL) Wang Dongfang and CEO Huaneng Shandong Ruyi Pakistan Energy (Private) Limited (HRS) in a joint letter to Finance Minister, Senator, Muhammad Aurangzeb.
The joint letter written had been written on February 18, 2025, a day before the hearing in NEPRA which had framed dozens of questions for the top brass of both the power companies. NEPRA has conducted the hearing and its decision is likely to be released soon.
According to both the CEOs, they highly appreciate Finance Minister’s continuous support and special attention to CPEC Project. Since 2017, Sahiwal, Port Qasim and China Hubco power plants have successfully commissioned, significantly alleviated the severe power shortage, becoming landmark achievement of CPEC.
On February 14, 2025, Port Qasim Electric Power Company (Private) Limited and Huaneng Shandong Ruyi Pakistan Energy (Private) Limited received a letter from NEPRA, stating that a public hearing is scheduled to be held on the February 19, 2025.
“Both companies suspect the intention is to reduce their tariff. We have sufficient legal and commercial grounds to prove that such practice is an obvious violation of relevant policies and agreements. We believe that undertaking this task at this juncture lacks due consideration, could cause serious damage to overall relation with Chinese Financial Institutions,” said CEOs of both the coal-fired power plants.
According to them, the capacity payment of both is high because they are still repaying principal and interest, adding that starting from October 2027, they will successively conclude the payment of principals, after which annual capacity payment will be reduced by nearly Rs.200 billion. It will be Rs.1.5/ kWh saving for all the consumers on an average, but the tariff reduction be made by NEPRA will only reduce the consumer tariff by Rs.0.1-0.2/kWh.
“As managers overseeing these demonstration projects, we have no authority to accept any significant contract-violating changes. We are obliged to notify financial institutions such as Sinosure, CDB, CEXIM, ICBC and BOC,” both companies said adding that this will also trigger the government guarantee and will lead to appeals to the court and London Arbitration Tribunal.
Both power companies have also stated that contrary to what many people believe, they have not reaped excessive profits in Pakistan. In fact, the returns received by shareholders are less than 1%, not to mention additional hundreds of millions of dollars in working capital that shareholders have been continuously injecting and massive devaluation losses.
“Relevant authority should carefully review the situation in the context of overall financial relations with China. A fair and constructive resolution is crucial for the continued success of our projects and the broader CPEC initiative. We are committed to working benefits and long-term prosperity,” they added.
Chinese power plants and a government’s committee headed by Finance Minister had started parleys on re-profiling of loans aimed at extending their duration. However, the negotiations have been suspended since the suicide attack on Chinese in Karachi, in which two Chinese, who were part of the negotiation, lost their lives. Ends
Chinese coal plants challenge NEPRA’s tariff alteration plans, threaten arbitration
ISLAMABAD: In another major development, two Chinese imported coal-fired power plants have threatened approach London Court of Arbitration (LCA) against government’s endeavour to reduce their tariff through National Electric Power Regulatory Authority(NEPRA).
This threat came from Chief Executive Officer (CEO), Port Qasim Electric Power Company (Private) Limited (PQEPCL) Wang Dongfang and CEO Huaneng Shandong Ruyi Pakistan Energy (Private) Limited (HRS) in a joint letter to Finance Minister, Senator, Muhammad Aurangzeb.
The joint letter written had been written on February 18, 2025, a day before the hearing in NEPRA which had framed dozens of questions for the top brass of both the power companies. NEPRA has conducted the hearing and its decision is likely to be released soon.
According to both the CEOs, they highly appreciate Finance Minister’s continuous support and special attention to CPEC Project. Since 2017, Sahiwal, Port Qasim and China Hubco power plants have successfully commissioned, significantly alleviated the severe power shortage, becoming landmark achievement of CPEC.
On February 14, 2025, Port Qasim Electric Power Company (Private) Limited and Huaneng Shandong Ruyi Pakistan Energy (Private) Limited received a letter from NEPRA, stating that a public hearing is scheduled to be held on the February 19, 2025.
“Both companies suspect the intention is to reduce their tariff. We have sufficient legal and commercial grounds to prove that such practice is an obvious violation of relevant policies and agreements. We believe that undertaking this task at this juncture lacks due consideration, could cause serious damage to overall relation with Chinese Financial Institutions,” said CEOs of both the coal-fired power plants.
According to them, the capacity payment of both is high because they are still repaying principal and interest, adding that starting from October 2027, they will successively conclude the payment of principals, after which annual capacity payment will be reduced by nearly Rs.200 billion. It will be Rs.1.5/ kWh saving for all the consumers on an average, but the tariff reduction be made by NEPRA will only reduce the consumer tariff by Rs.0.1-0.2/kWh.
“As managers overseeing these demonstration projects, we have no authority to accept any significant contract-violating changes. We are obliged to notify financial institutions such as Sinosure, CDB, CEXIM, ICBC and BOC,” both companies said adding that this will also trigger the government guarantee and will lead to appeals to the court and London Arbitration Tribunal.
Both power companies have also stated that contrary to what many people believe, they have not reaped excessive profits in Pakistan. In fact, the returns received by shareholders are less than 1%, not to mention additional hundreds of millions of dollars in working capital that shareholders have been continuously injecting and massive devaluation losses.
“Relevant authority should carefully review the situation in the context of overall financial relations with China. A fair and constructive resolution is crucial for the continued success of our projects and the broader CPEC initiative. We are committed to working benefits and long-term prosperity,” they added.
Chinese power plants and a government’s committee headed by Finance Minister had started parleys on re-profiling of loans aimed at extending their duration. However, the negotiations have been suspended since the suicide attack on Chinese in Karachi, in which two Chinese, who were part of the negotiation, lost their lives. Ends
