Prime Minister Shehbaz Sharif announced on Friday that he has officially requested the Chinese authorities to consider the reprofiling of Pakistan’s debt.
“I have sent a letter to China today regarding the reprofiling of our debt,” stated PM Shehbaz during a federal cabinet meeting in Islamabad.
This statement follows recent comments from Finance Minister Muhammad Aurangzeb, who revealed that Pakistan has started discussions with China on reprofiling its power sector debt. Aurangzeb mentioned that the approach would involve addressing Chinese credit on a project-by-project basis, with Islamabad planning to appoint a local advisor in China to assist with the process.
China has been a longstanding ally of Pakistan, and previous loan rollovers and disbursements from China have helped Pakistan manage its external financing requirements.
Pakistan is also in negotiations with Saudi Arabia, the United Arab Emirates, and China to secure the necessary financing under an IMF program, for which Islamabad is seeking board-level approval.
Earlier this month, the IMF agreed to a $7 billion bailout for Pakistan’s struggling economy but raised concerns about the high rates of power theft and distribution losses that contribute to accumulating debt across the energy sector.
During the cabinet meeting, PM Shehbaz also shared that Chinese President Xi Jinping had positively responded to his suggestion of converting CPEC coal-based power projects to local coal.
“I informed the president that using Thar coal could help Pakistan reduce its import costs and save $1 billion in foreign exchange annually,” the PM explained.
He assured that the current government is fully aware of the challenges faced by the people and is working diligently to provide relief. He outlined several “short and medium term” initiatives aimed at resolving issues in the energy sector and reducing high electricity bills.
Among these measures, PM Shehbaz highlighted the government’s decision to provide Rs50 billion in subsidies for three months of electricity bills to consumers using up to two hundred units. Additionally, he mentioned a large-scale project in Balochistan, costing Rs70 billion, to convert tube wells to solar energy, with the federal government contributing Rs55 billion.
The Prime Minister also noted ongoing efforts to resolve issues with Independent Power Producers (IPPs) and the development of a mechanism to manage those IPPs that are under government control.
4o
