Pakistan China debt: In a major shock for debt-ridden Pakistan, its “Iron Brother” and “all-weather ally”, China, has refused to negotiate a PKR 170 billion debt waiver, prompting Islamabad to seek financial help from Saudi Arabia.
How much does Pakistan owe China?
According to reports, Chinese power companies have refused to negotiate a waiver of a $170 billion late payment surcharge, and Beijing has also declined to review the terms of its energy agreements with Islamabad.
The dispute stems from Pakistan’s failure to clear PKR 423 billion in outstanding dues related to 18 power plants built under the China Pakistan Economic Corridor (CPEC). The amount is due for the 2025-26 financial year, but negotiations between the two allies regarding the repayment of the debt have been unsuccessful so far.
Why Chinese power firm to waive off Pakistan’s debt?
Pakistan defaulting on the loan violates the 2015 CPEC energy agreement, and had appealed Chinese companies to waive late payment interest of 170 billion Pakistani rupees, but they remained unmoved, leaving the Shehbaz Sharif government with no option but to borrow money from other countries to repay the loan.
Reports say that Pakistan has now turned to Saudi Arabia for help, and hopes to secure a $10 billion low-interest loan from Riyadh and other friendly countries in the Gulf.
How much is Pakistan paying for Chinese power?
The loan will help Pakistan repay China’s prohibitively expensive energy debt and stabilize the country’s power sector. Islamabad is hoping repaying the high-interest Chinese debt will help reduce electricity rates, providing relief to the Pakistani public.
As per estimates, Pakistani consumers could have to pay $30.6 billion over the next 13 years to Chinese power companies, a gigantic amount considering the countries crippling debt crisis, failing economy and high-inflation rates.
First published on: Jul 13, 2026 10:56 PM IST
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