ISLAMABAD: Despite securing Rs1.225 trillion in new financing from commercial banks to reduce circular debt, the power sector will remain vulnerable to exchange rate fluctuations for up to eight years due to dollar-indexed investments, particularly those linked to Chinese power projects.

Speaking at a news conference on Friday, Power Minister Sardar Awais Leghari said power projects commissioned after 2015 — largely under the China-Pakistan Economic Corridor (CPEC) — were financed in US dollars and remain exposed to currency depreciation. These projects, with a generation capacity exceeding 11,000 megawatts, have locked-in dollar-based tariffs and debt servicing, placing ongoing pressure on power sector finances.

“The dollar-linked debt will remain sensitive to exchange rate fluctuations for the next 7–8 years,” Mr Leghari said. He noted that when the contracts were signed during the PML-N government, the exchange rate........

© Dawn Business