KARACHI – State Bank of Pakistan faced complaint from Chinese Firm for delays in Foreign Exchange Approval.
A report shared in local publication said Pak Matiari-Lahore Transmission Company (PMLTC) raised concerns with Pakistan’s central bank over its failure to approve foreign exchange required for debt servicing and Sinosure premiums.
President and CEO of Chinese firm raised the matter in meeting with Power Minister Sardar Awais Leghari, saying under their Transmission Service Agreement (TSA) and Land Lease Agreement (LLA), the National Transmission and Dispatch Company (NTDC) is obligated to secure and transfer land rights necessary for the HVDC transmission project.
PMLTC officials said title documents and leasing areas for Converter Stations are meant to provided while key parcels of land remain untransferred, and it adversely affected project’s progress.
The agreement also specifies that Transmission Service Payments are due monthly within a month, but delays of four to five months are common. With a recovery rate of 84.5 percent, the funds received are only adequate for debt servicing and essential operational expenses, leaving no funds for dividends, which has adversely affected shareholders and investors.
PMLTC said State Bank’s approval for foreign exchange has either been limited or delayed. It mentioned that the firm holds around $53 million in bank accounts awaiting SBP approval.
The firm is required to deposit an installment of principal and interest into the Debt Service Reserve Account as per our Facility Agreement, officials said, and added despite repeated attempts, we have been unable to obtain SBP’s approval, resulting in a fundamental default on our Facility Agreement with the project’s lender.
