The State Bank of Pakistan (SBP) has received a complaint from a Chinese firm regarding delays in foreign exchange approvals. According to a report in a local publication, the Pak Matiari-Lahore Transmission Company (PMLTC) has expressed concerns to Pakistan’s central bank about its failure to approve the foreign exchange needed for debt servicing and Sinosure premiums.
The President and CEO of the Chinese firm brought up the issue during a meeting with Power Minister Sardar Awais Leghari. He highlighted that under the Transmission Service Agreement (TSA) and Land Lease Agreement (LLA), the National Transmission and Dispatch Company (NTDC) is responsible for securing and transferring land rights necessary for the HVDC transmission project.
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PMLTC officials noted that while title documents and leasing areas for Converter Stations are to be provided, several key parcels of land remain untransferred, which has negatively impacted the project’s progress.
The agreement also stipulates that Transmission Service Payments are due monthly within a month; however, delays of four to five months are frequently encountered. With a recovery rate of 84.5 percent, the funds received are only sufficient for debt servicing and essential operational expenses, leaving no room for dividends, which has adversely affected shareholders and investors.
PMLTC reported that the State Bank’s approval for foreign exchange has been either limited or delayed. The firm currently has around $53 million in bank accounts awaiting SBP approval.
Officials stated that the firm is required to deposit an installment of principal and interest into the Debt Service Reserve Account according to the Facility Agreement. Despite multiple attempts, they have been unable to secure SBP’s approval, leading to a fundamental default on their Facility Agreement with the project’s lender.
