Pakistan has paid over Rs100 billion Chinese energy debt in outstanding dues to Chinese power producers, reducing its financial obligations under China-Pakistan Economic Corridor (CPEC) energy projects by nearly a quarter, government officials confirmed.
According to reliable reports the outstanding Chinese energy debt stood at approximately Rs423 billion as of June this year. With this payment, liabilities owed to Chinese power producers now total just over Rs300 billion.
The settlement was funded through power sector subsidies already earmarked in this fiscal year’s budget, with disbursement expected in the coming days. An additional Rs8 billion has also been allocated from the regular budget.
This move comes ahead of Prime Minister Shehbaz Sharif’s state visit to Beijing for the upcoming Shanghai Cooperation Organization summit, a strategic gesture aimed at easing bilateral tensions and improving diplomatic rapport.
Pakistan has been under pressure to manage mounting energy sector debts. In June, the government signed a Rs1.275 trillion (USD 4.5 billion) Islamic financing agreement with local banks to ease energy sector debt without increasing public borrowing.
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The clearance of Rs100 billion in payments is expected to signal Pakistan’s intent to meet its financial commitments under the CPEC Energy Framework Agreement, which requires timely settlement of dues to Chinese producers.
Earlier, Pakistan had also negotiated rollover of Chinese loans worth $3.4 billion to protect its fiscal and foreign exchange stability.
Overall, the debt repayment and financing moves reinforce Pakistan’s priority to reduce its energy liabilities, stabilize its economy, and position the country for smoother engagement with China during upcoming diplomatic visits.
