Pakistan Plans to Replace Costly CPEC Power Debt with Cheaper Saudi Financing

Islamabad: The Pakistani government is reportedly exploring a plan to refinance expensive debt linked to power projects under the China-Pakistan Economic Corridor (CPEC) by securing lower-cost financing from Saudi Arabia.

According to journalist Shehbaz Rana, repayments for CPEC power sector projects began in 2018 and are continuing. Speaking on an Express News program, he said the government aims to reduce its financing costs by replacing high-interest Chinese loans with cheaper funding from Saudi Arabia and other international financial institutions, including the World Bank.

Under the reported plan, the government estimates it will require around $10 billion between 2026 and 2034 to repay the outstanding Chinese debt associated with the power projects while lowering borrowing costs.

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The report also stated that Pakistan’s annual Saudi oil financing facility expired in April 2026. Islamabad has reportedly requested Saudi Arabia to replace the annual arrangement with a long-term deferred oil financing facility worth $6.7 billion. Pakistan has also sought to reduce the financing cost from 6% to 1% and extend the repayment period to 15 years.

The reported proposals have not yet been officially announced or confirmed by the governments of Pakistan or Saudi Arabia. If implemented, the refinancing plan could reduce Pakistan’s debt-servicing burden and ease pressure on the country’s external financing requirements.