Page 8 - AsiaElec Week 06 2021

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Pakistan tries to reschedule Belt

and Road debt repayments

PAKISTAN PAKISTAN is to ask China to reschedule loan that the initiative leads to debt traps, while
repayments for power projects financed by Bei- acknowledging that countries have had difficul-
jing over the past eight years. ties repaying loans due to the pandemic-induced
Pakistan and China have held talks over global recession. Last year Beijing cancelled
refinancing loans for up to 12 power plants, interest-free loans to 15 African countries due
Bloomberg reported. to mature by the end of 2020, and it has delayed
Pakistan is now the latest debtor that is strug- other payments.
gling to repay loans incurred under China’s Belt In 2020, Pakistan signed $11bn worth of pro-
and Road Initiative (BRI). jects under the Belt and Road programme, most
An enormous build-out of Chinese-financed of which were in the rail sector.
power plants in Pakistan, which was originally While Chinese financing has helped Paki-
intended to solve its electricity shortages, has stan diversify fuel supplies, it has also resulted in
resulted in a surplus that Islamabad isn’t able to a surplus of electricity, which is problematic for
afford. the government.
Infrastructure projects funded by Chinese The government is the sole buyer and pays
initiatives in other developing nations, such as producers even when they do not generate
Sri Lanka and Malaysia, have suffered issues because of insufficient demand.
ranging from heavy debt loads to corruption. To help tackle the issue, the government has
A spokesperson at China’s Ministry of For- negotiated with power plants, which produce
eign Affairs said they are not aware of Pakistan’s roughly half of its electricity, to charge lower
plan to seek debt relief. rates.
“Energy projects have provided Pakistan Pakistan will formally make the request to
with a large amount of stable and low-priced defer debt payments to China, as well as other
electricity, effectively reducing the overall price plants that were part of the latest power policy,
of electricity in Pakistan,” the spokesperson said after it concludes deals with those local power
in a written response. “China-Pakistan energy producers to reduce electricity tariffs, Bloomb-
co-operation has progressed smoothly and erg reported.
brought about real economic and social benefits.” Debt relief from China will also help the gov-
China has previously denied US criticism ernment reduce power payments.™

P8 www. NEWSBASE .com Week 06 10•February•2021