Key Takeaways:
– PMLTC faces delays in foreign exchange approval for debt servicing and insurance premiums.
– Land transfer issues are affecting the construction and operation of the HVDC transmission project.
– Payment delays by NTDC/CPPA-G are impacting PMLTC’s financial stability.
Pak Matiari-Lahore Transmission Company (Private) Limited (PMLTC), a Chinese firm, has filed a complaint against the State Bank of Pakistan (SBP) for delays in approving foreign exchange necessary for debt servicing and Sinosure insurance premiums. This issue was highlighted during a recent meeting between PMLTC President and CEO Zhang Lei and Pakistan’s Power Minister Sardar Awais Leghari.
Land Transfer Delays
Zhang Lei pointed out that under the Transmission Service Agreement (TSA) and LLA agreements, the National Transmission and Dispatch Company (NTDC) is required to secure and lease the necessary land for the Matiari and Lahore Converter Stations, as well as the Lahore Electrode Station. However, significant portions of land, including 10 acres for the Matiari Converter Station, 8 kanals for the Lahore Converter Station, and 206 kanals for the Lahore Electrode Station, have not yet been transferred. This delay has adversely impacted the project’s construction and operational timelines.
PMLTC has struggled to secure approval from the State Bank of Pakistan for foreign exchange transactions. Despite having approximately $53 million in Pakistani Rupees in its accounts, PMLTC has faced prolonged delays in getting the necessary approvals for foreign debt servicing and Sinosure premiums.
Payment Delays and Financial Impact
PMLTC has also raised concerns about delayed payments from NTDC/CPPA-G. Although Transmission Service Payments are contractually due on a monthly basis within thirty days, they are typically delayed by four to five months. With a recovery rate of only 84.5%, the funds received barely cover debt servicing and basic operating costs, leaving no surplus for dividends to shareholders and investors.
Issues with Foreign Exchange Approval
Further complicating matters, PMLTC has struggled to secure approval from the State Bank of Pakistan for foreign exchange transactions. Despite having approximately $53 million in Pakistani Rupees in its accounts, PMLTC has faced prolonged delays in getting the necessary approvals for foreign debt servicing and Sinosure premiums. The company is also required to inject funds into a Debt Service Reserve Account as mandated by the Facility Agreement, but repeated attempts to gain approval from the State Bank have been unsuccessful. This has led to a fundamental default under the Facility Agreement with the project’s lender.
Conclusion
The challenges faced by PMLTC highlight significant administrative and financial obstacles in the execution of critical infrastructure projects in Pakistan. The delays in land transfers, payment disbursements, and foreign exchange approvals not only hamper the project’s progress but also affect investor confidence.
