Due to the high cost of imported fuel and its preference for local resources, Pakistan has decided to abandon a plan to build an imported coal-fired power plant at Gwadar as part of the China-Pakistan Economic Corridor (CPEC).
Additionally, the government had recently informed the project’s sponsor, China Communications Construction Group (CCCG), of its choice. The coal-fired power plant’s construction was expected to cost the corporation $542 million.
According to the sources, Planning Minister Ahsan Iqbal has requested the relevant authorities to recommend alternative choices that would be provided to the sponsor instead of the imported coal-based power plant.
In order to identify other solutions, the authorities have been ordered to conduct feasibility studies. The choice represents a break from Pakistan’s pledge to China in February of this year. Pakistan has committed to including the 300-megawatt Gwadar coal-fired power Plant among its highest priority plans for paying bills once the project had been put into service.
The government also agreed to include the much-delayed power plant in its highest priority schemes for the clearance of electricity dues in a bid to address the biggest concern of China.
The early harvest programs that were to be finished during the first phase of CPEC included the Gwadar power project (2015-18). However, there were delays since the Chinese insurance company declined to offer loan guarantees because other Chinese power projects had payment issues.
During a pre-CPEC Joint Cooperation Committee (JCC) meeting this week, Ahsan Iqbal went over specifics. The JCC, which oversees CPEC’s strategic planning, will need to approve Pakistan’s decision before it can make any unilateral changes to a project. The 11th JCC session should take place before the second week of November when Prime Minister Shehbaz Sharif would travel to China.
Around 14MW of the approximately 70MW of electricity Pakistan receives from Iran is designated for Gwadar.
Another barrier to industrialization is that Gwadar is not connected to the national power grid. Moving the plant to Thar suggests that the industrial sector, which is still developing in Gwadar, does not have a high demand for electricity.
According to sources, the planning minister once more recommended that the Ministry of Finance speed up and form a special bank account to protect Chinese projects from circular debt. The government recently paid the Chinese IPPs roughly Rs45 billion, bringing the amount owed by Chinese power plants down to less than Rs240 billion.
These payments are a standard part of clearing the cost of energy production, and the Chinese plants have not received any special treatment.
Pakistan has updated its security procedures, according to sources, to address the issue of the protection of Chinese citizens and their property. The Joint Working Group on Safety and Security made the choice last month during a meeting. The updated protocols, however, have prompted concerns from the Ministry of Communications.
In order to sign agreements with the Chinese government during the upcoming JCC meeting, Ahsan Iqbal gave the Ministry of Science and Technology instructions to fulfill the necessary paperwork.
During a meeting of the Joint Working Group on Information Technology, both countries decided to set up six sub-working groups on communication technology infrastructure, application innovation, policy and regulation, HR development, cyber security, and radio spectrum regulation.
Pak-China Technology Business Forum will be formally established during the JCC meeting. It was decided that Pakistan would try to approve the revised PC-I of the Mainline-I project of Pakistan Railways before the upcoming JCC meeting.
The Ministry of Railways has submitted a revised cost of $10 billion, which is about 45% higher than the original price. But the Ministry of Planning has raised objections. A major push will be given to the agriculture sector, as both sides are expected to sign new government-to-government and business-to-business deals during the upcoming JCC sitting. Pakistan will also request China for the transfer of technology.
