Chinese IPP Files Complaint Against SBP Over Debt Servicing Delay

China’s Pak Matiari-Lahore Transmission Company (PMLTC) has filed a formal complaint against the State Bank of Pakistan (SBP) for blocking foreign exchange for debt servicing and Sinosure premium payments. PMLTC has repeatedly sought SBP’s approval for foreign exchange to meet its debt obligations, but approvals have been limited or delayed, reported Business Recorder. The company has $53 million in PKR awaiting SBP approval and must inject principal and interest into the Debt Service Reserve Account as per the Facility Agreement. Approval delays have led to a default under the Facility Agreement with the lender. In a recent meeting with Power Minister Awais Leghari, PMLTC’s President and CEO Zhang Lei informed the minister that multiple contractual and operational issues were affecting the company’s HVDC transmission project. PMLTC said that according to the Transmission Service Agreement (TSA) and Land Lease Agreement (LLA), the National Transmission and Despatch Company (NTDC) is obligated to secure and lease land necessary for the project’s construction and operation. However, there are significant delays in transferring property, including 10 acres for the Matiari Converter Station, 8 kanals for the Lahore Converter Station, and 206 kanals for the Lahore Electrode Station. These delays have negatively impacted the project’s progress. PMLTC pointed out that monthly Transmission Service Payments from NTDC/CPPA-G are often delayed by four to five months, with a recovery rate of only 84.5 percent. The funds received barely cover debt servicing and basic operating costs, leaving no surplus for dividend distribution, thus affecting shareholders and investors. These ongoing issues underscore significant operational and financial challenges faced by PMLTC, potentially affecting the overall success of the HVDC transmission project.