CHINESE PARTICIPATION IN POWER SECTOR OF PAKISTAN

ISMAT SABIR
Dec 01 - 07, 2008

The territory of Peopleís Republic of China is spread over an area of 9,596,960 square kilometer with 1.3 billion inhabitants. On 21st May 1951, the Islamic Republic of Pakistan and the People's Republic of China established official diplomatic relations. Pakistan recognized China on 4th January 1950.

The faith and trust in each other reflects the importance of Pakistan-China relations, which are commonly known as friendship higher than the Himalayas, deeper than the oceans and sweeter than honey.

China has helped Pakistan in setting up or upgrading many complicated and basic industries and infrastructure projects like Karakoram Highway, Heavy Mechanical Complex, Forge and Foundry Project, Heavy Rebuild Factory, Guddu-4 and Jamshoro-2 Thermal Power Stations, Heavy Electrical Complex near, Haripur, and agriculture sector. Similarly China continued technical and financial help for Sandak project. China has invested about $50 billion to develop Gwadar port on the pattern of its Shenzhen port.

INVESTMENT

Presently, about 30 Chinese companies and 400 engineers are taking part in various projects. China is actively taking part in developing power sector of Pakistan. For instance, WAPDA has awarded the contract for the construction of Neelum-Jhelum Hydroelectric Project to a consortium comprising of China Gezhouba Group of Company and China Machinery Export Corporation.

Rs4.1 billion agreement for consultancy services for Neelum-Jhelum Hydroelectric Project (NUHEP) has been signed between WAPDA and Neelum-Jhelum Consultants, a joint venture of two foreign and three local firms.

The 969MW Project expected to be completed in seven years with a total cost of Rs130 billion will contribute more than 5 billion units of electricity annually. The project would help improve the ratio of Hydel electricity in the total generation system. Per unit electricity generated will cost only Rs1.92, which is about three times less than that of the thermal generation.

WAPDA is making detailed engineering designs of various hydropower projects having a capacity of 25,000MW. Recently, Ecnec has approved Diamer-Basha Dam at a cost of $12.6 billion. It would generate 4,500MW electricity. China and Middle East are keen in construction of this project.

Sinohydro Corporation of China is to invest $1.7 billion for generating 1,200MW Kohala hydropower project producing low cost hydel electricity. The assurance for investment was given to President Asif Ali Zardari during his visit to China.

Moreover, Bunji Hydropower Project, 5,400MW, is also expected to start in 2010 or 2011.

The consultants have been appointed and tender documents are in its final stages. The company is already constructing Gomal Zam Dam, Khan Khawar Hydropower project and Dubair Khawar Hydropower project in Pakistan.

The government is working on mega power projects like Bhasha dam, Munda dam and Thar coal projects and looking towards different countries, , especially China, for financing of these projects.

In March 2003, three MoUs were signed to help setting up 300MW nuclear power plant at Chasma by China. Initially, Pakistan has decided to launch two new nuclear power projects as C3 and C4 at Chashma. The cost is estimated to about Rs129.374 billion that would generate total 640MW power to be inducted into national grid.

Each plant would have the capacity of 320MW and each project would cost Rs64.687 billion. The government would arrange Rs80.36 billion from international donor institutions and countries and major share of the financing is expected to come from China, for which Pakistan is negotiating. For these plants the government has allocated Rs100 million in PSDP 2008-09.

Former president Gen (Retd) Pervez Musharraf had also placed a request before the Chinese government during his visit to China for financing nuclear power plants and present president Asif Ali Zardari reiterated the request.

In total, Pakistan has planned to set up four new nuclear power plants to produce 1,280MW power of which two nuclear power projects would be launched in 2008-09. These new nuclear projects are part of the governmentís 2030 vision strategy under which over 8,000MW power to be generated by 2030.

At present, the Pakistan Atomic Energy Commission is operating only two nuclear power plants: the 110MW Karachi Nuclear Power Plant (KANUPP), built with Canadian assistance in the 1960s; and the 325 MW Chashma Nuclear Power Plant (CHANUPP-I) in Punjab, built with Chinese assistance in the 1990s.

In 2004, work began on another 325MW nuclear power plant at Chashma, CHANUPP-II, also with Chinese assistance. China has given Pakistan $700 million in aid to build it, but under present plans it will not be commissioned until 2011.

In order to promote alternative energy, especially with wind generation, a Pakistani enterprise, Planet Energy Ltd. has signed the MoU with Goldwind Science and Technology, Chinaís largest and one of the worldís top 10 wind turbine manufacturers for purchase of turbines for its planned 50MW wind farm with the option of increasing it to 150MW.

Sindh has 150MW coal-based power plants, three units of 50MW each, based on fluidised bed combustion technology acquired from China. An American firm was awarded a project for commissioning coal-fired 1000MW power station. Also the Fatteh Group of Hyderabad and the China National Chemical Engineering Group, engaged in setting up 250MW coal-fired power plants.

Besides investing in oil, gas exploration, hydropower and wind power units Chinese investors are also keen to set up oil refinery in Karachi.

The Poly Techno, a Chinese company, had also offered for setting up a plant of 50MW each one in Karachi and Lahore for producing electricity from waste.

On the one hand, Chinese investors are sincerely doing efforts to solve power shortage problem in Pakistan but on the other they are facing several problems and have sought the foreign ministry's assistance against the Private Power Infrastructure Board decision not to further extend the date of submission of a feasibility study of 250MW coal-based power plant.

China National Machinery Import and Export Corporation (CMC), which was working on Sonda-Jherruck coal mine and power project, wrote a letter to Foreign Affairs Secretary, Salman Bashir, reminding him of his endeavors to attract foreign investment, an objective that might be reverted by the PPIB decision.

As the project is the first of its kind in Pakistan and also the first for the CMC on BOT basis, there were complex issues that need to be resolved between the company and relevant organizations both in China and Pakistan, which has delayed the project.

The firm had also written a letter to the PPIB Managing Director, in which it said that the board decision might harm bilateral relations between the two countries. Chinese embassy has also met with Water and Power Secretary and conveyed him the Chinese government's reservations about the PPIB decision.

CMC is working for long time with relevant government agencies in Pakistan to develop the integrated coal mine and power project. The coal geological investigation and feasibility study were completed in 2007 and based on that, the mining licence was granted by Sindh government and lease deed was signed with the provincial government in 2008.

The company said that it would not like to enter any argument with regard to the 'reasons for delay', as it would cause unnecessary unpleasantness. However, the company is serious in undertaking the project as it has already invested $10 million and is making every effort to finalise the feasibility study as soon as possible.

The PPIB is unwilling to further extend the deadline maintaining that such promises were made by the CMC through its representatives during their visit to Islamabad in the past; promises that were never fulfilled. However, if the company submits a bankable feasibility study for the project, then the PPIB, without any financial or legal obligation on its part, may review the study.