Govt to shelve big coal power project


Govt to shelve big coal power project

ISLAMABAD: Pakistan has opted not to move through with its proposal to build an imported coal-fired power plant at Gwadar as part of the China-Pakistan Economic Corridor (CPEC) because of the high cost of imported fuel and its preference for domestic resources.

The government recently notified the project’s sponsor, China Communications Construction Group (CCCG), The plant’s setup would have cost the corporation $542 million.

According to the sources, Ahsan Iqbal, minister of planning, has requested that the relevant agencies provide suggestions for substitute choices that would be provided to the sponsor in place of the imported coal-based power plant.

For the purpose of identifying different solutions, the authorities have been ordered to carry out feasibility studies. With this choice, Pakistan has reneged on the promise it made to China in February of this year. For the payment of invoices following project commissioning, Pakistan had committed to put the 300 megawatt Gwadar power plant among its highest priority programmes.

To address China’s top worry, the government also consented to put the power plant that has been delayed a great deal in its top priority plans for paying electricity debts.

The early harvest projects, including the Gwadar power plant, have to be finished during the first phase of CPEC (2015-18). However, there were delays because other Chinese power projects’ payment issues prevented the Chinese insurance firm from offering loan guarantees.

At a Joint Cooperation Committee (JCC) meeting this week in preparation for CPEC, Ahsan Iqbal went through specifics.

Pakistan cannot, however, alter a project unilaterally; instead, it must present its choice to the JCC for approval, which oversees CPEC’s strategic planning.

The 11th JCC session should take place before the Prime Minister Shehbaz Sharif’s next trip to China, which is planned for the second week of November.

The administration reportedly attempted to schedule the JCC meeting for the final week of October, according to sources. The meeting, however, will once more take place remotely, much like the previous JCC gathering. Depending on the sources’ information, the government may propose to the Chinese corporation that they either build the power plant using solar energy or relocate it to Thar.

Read Third coal-fired power station opens in Thar

After opting to build three CPEC power plants using imported coal eight years ago, the government of Pakistan Muslim League-Nawaz (PML-N) is now encouraging the use of local coal. The Gwadar plant was built to supply power to the port city, which experiences load-shedding for 12 to 16 hours a day and imports all of its electricity from Iran.

About 14MW of Pakistan’s approximately 70MW import of power from Iran are designated for Gwadar.

Another barrier to industrialization is the lack of a national power grid connection in Gwadar. The move of the plant to Thar suggests that the industrial sector, which is still developing in Gwadar, is not very energy-demanding.

The planning minister reportedly requested once more that the Ministry of Finance hurry up and form a special bank account to protect Chinese projects from circular debt. After the government recently paid the Chinese IPPs roughly Rs45 billion, the outstanding debt of Chinese power plants has been reduced to less than Rs240 billion.

There has been no preferential treatment provided to the Chinese plants; these payments are a standard element of the clearance of power generating costs.

According to authorities, Pakistan has updated its security procedures to handle the problem of the security of Chinese nationals and their property. The choice was reached last month during a Joint Working Group on Safety and Security meeting. The updated procedures, however, are causing the Ministry of Communications some anxiety.

Ahsan Iqbal gave the Ministry of Science and Technology the task of completing the legal requirements in time for the forthcoming JCC conference to sign agreements with the Chinese government.

The Joint Working Group on Information Technology resolved to organise six sub-working groups to address communication technology infrastructure, application innovation, policy and regulation, HR development, cyber security, and radio spectrum regulation.

The JCC summit will see the official launch of the Pak-China Technology Business Forum.

It was determined that Pakistan will attempt to have the amended PC-I of the Pakistan Railways’ Mainline-I project approved before the future JCC conference.

A revised cost of $10 billion, or around 45% more than the initial cost, has been provided by the Ministry of Railways. However, the Ministry of Planning has voiced concerns.

The agriculture industry will receive a lot of attention since new government-to-government and business-to-business agreements are anticipated to be signed by both parties during the forthcoming JCC meeting. Pakistan would want China to handover technologies as well.