Pakistan Seeks Saudi Lifeline As China Refuses To Ease Power Loan Burden | Exclusive

Published 13 July 2026 · finance

Pakistan Seeks Saudi Lifeline As China Refuses To Ease Power Loan Burden | Exclusive Reported By, Edited By Last Updated: July 13, 2026, 14:27 IST

Pakistan Seeks Saudi Lifeline As China Refuses To Ease Power Loan Burden | Exclusive Reported By, Edited By Last Updated: July 13, 2026, 14:27 IST The standoff comes as Pakistan struggles with PKR 423 billion in outstanding dues owed to 18 China-Pakistan Economic Corridor power plants, despite efforts to resolve the issue Rapid Read The unpaid bills, accumulated during the 2025-26 fiscal year, are also seen as a violation of commitments made under the 2015 CPEC Energy Framework Agreement. Pakistan’s worsening debt crisis has entered a new phase after Chinese power producers reportedly refused to renegotiate key terms of their energy contracts or waive nearly PKR 170 billion in late-payment surcharge claims, dealing a blow to Islamabad’s efforts to reduce mounting liabilities in the power sector.

The standoff comes as the Pakistan government struggles with PKR 423 billion in outstanding dues owed to 18 China-Pakistan Economic Corridor (CPEC) power plants, despite repeated efforts to resolve the issue. The unpaid bills, accumulated during the 2025-26 fiscal year, are also seen as a violation of commitments made under the 2015 CPEC Energy Framework Agreement. Facing growing pressure, Islamabad is now searching for up to $10 billion in low-interest foreign financing, including from Saudi Arabia, to retire expensive Chinese energy debt and stabilise the country’s power sector. Officials are also seeking cabinet approval to revive an expired PKR 1.25 trillion circular debt banking facility as part of a broader plan to tackle the crisis. The government hopes that replacing high-cost liabilities with bilateral loans carrying interest rates of around one per cent could help reduce electricity tariffs by nearly 3 US cents per unit, offering relief to consumers and industry.

However, negotiations with Chinese companies have hit a roadblock. The firms have reportedly refused to write off PKR 170 billion in late-payment interest or alter existing contractual terms, limiting Pakistan’s options to reduce its financial burden. The unresolved dues threaten to prolong Pakistan’s chronic circular debt crisis. Under current projections, Pakistani consumers could end up bearing an estimated $30.6 billion burden over the next 13 years to service liabilities linked to independent power producers. The latest developments underscore Islamabad’s continued dependence on external financing to manage obligations arising from CPEC-era energy projects, even as it struggles to balance fiscal constraints, rising power costs and commitments made to Chinese investors. News18 Newsletter Handpicked stories, in your inbox A newsletter with the best of our journalism submit About the Author Manoj Gupta Group Editor, Investigations & Security Affairs, Network18 Location: Islamabad, Pakistan First Published: July 13, 2026, 14:27 IST News world Pakistan Seeks Saudi Lifeline As China Refuses To Ease Power Loan Burden | Exclusive Disclaimer: Comments reflect users’ views, not News18’s.