CPEC Power Projects Face Rs498 Billion in Unpaid Dues as Sovereign Default Risks Mount

Chinese power projects established under the China-Pakistan Economic Corridor (CPEC) are awaiting outstanding payments of approximately Rs498 billion from the Central Power Purchasing Agency-Guarantee (CPPA-G), which is struggling to clear the liabilities amid persistent financial constraints.

Well-informed sources confirmed that representatives of the power companies have repeatedly reminded CPPA-G of its payment obligations through official correspondence. The issue has, on several occasions, reached the office of the Prime Minister.

In a significant escalation, the Chief Executive Officer of Port Qasim Electric Power Company (PQEPC), Wang Dongfeng, recently wrote to the Ministers for Finance and Revenue, Planning, Development and Special Initiatives, and Energy (Power Division). He sought urgent government intervention to settle the company’s outstanding dues.

PQEPC, which operates a 1,320-megawatt coal-fired power plant under CPEC, reported that its receivables had reached Rs79 billion (equivalent to about $285.4 million) as of September 29, 2026. Payments have been delayed for more than six months. The company warned that prolonged delays could threaten sustainable power generation and trigger defaults under its loan agreements and the government’s sovereign guarantee.

Chinese and Qatari shareholders in the project have also expressed serious concerns over the mounting dues and called for early settlement. PQEPC noted that its energy purchase price tariff remains more competitive than many oil- and RLNG-based plants, arguing that timely payments are essential to maintain generation and meet debt obligations.

Meanwhile, outstanding receivables of the 1,320-MW Sahiwal coal-fired power plant have reportedly climbed to around Rs80 billion. The company has been approaching the government periodically for clearance of its dues. Together, Port Qasim and Sahiwal alone account for roughly Rs159 billion of the reported receivables.

The broader outstanding amount owed by CPPA-G to CPEC power projects stands at Rs498 billion, according to sources. Industry observers note that continued non-payment raises risks of operational disruptions at these plants and potential activation of sovereign guarantees, heightening concerns about Pakistan’s overall fiscal and external debt vulnerabilities.

The accumulation of these dues forms part of the long-running circular debt crisis in Pakistan’s power sector. Chinese independent power producers have previously resisted requests to waive late-payment surcharges, complicating government efforts to restructure liabilities and stabilize the sector.

Authorities continue to face pressure to arrange liquidity for CPPA-G to prevent further escalation that could undermine both energy security and bilateral economic commitments under the CPEC framework.