Several China-sponsored power projects hit snags

Published: January 5, 2017
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ISLAMABAD: Only about half of the planned generation of 8,810 megawatts from China-sponsored energy projects will be available by 2018 as inter-ministerial disputes and inclusion of financially unviable projects at the initial stage of the China-Pakistan Economic Corridor (CPEC) prevent the two sides from meeting the target.

Power projects having a cumulative capacity of about 5,000 megawatts under CPEC would be operational by 2017 and 2018, Planning, Development and Reforms Minister Ahsan Iqbal announced at a news conference on Wednesday. It was his first interaction with media after attending the sixth meeting of CPEC Joint Cooperation Committee (JCC) in Beijing.

China would like to involve other countries in CPEC after consulting Pakistan: Beijing

At present, the minister said, over 8,000MW CPEC energy projects were at various stages of construction and financial close. In addition to these, another 5,000MW non-CPEC projects will be ready by 2018, which will help meet energy shortages in the country.

However, under the CPEC framework agreement, Pakistan and China had agreed that thermal, wind and solar power projects of 8,810MW would start running in 2017 and 2018. In addition to these, two hydroelectric power projects of 1,570MW would begin operation around 2020.

All of these have been described as “prioritised projects” in the sovereign CPEC framework agreement.

Lingering inter-ministerial disputes and inclusion of non-bankable projects in the CPEC framework were main reasons for the delay in the power projects, said sources in the Ministry of Water and Power and Ministry of Planning.

In the third meeting of JCC held on August 27, 2014, 21 energy projects valuing $33.8 billion had been identified as Early Harvest prioritised projects.

They pointed out that the 1,320MW Rahim Yar Khan coal-based power project was not financially viable as there was no transmission line at the project site.

Similarly, a 300MW plant was planned to be set up in the Salt Range in Punjab, but water and allied facilities were missing there.

The Ministry of Water and Power and Wapda had also reservations about a 300MW project at Gwadar, said the sources. Last year, the ministry had warned the sponsors of five energy projects to fast-track work or the schemes would be dropped from CPEC.

Responding to a question, the planning minister said some of the delayed projects would be made operational by 2019 and 2020.

For swift implementation of the CPEC projects, Prime Minister Nawaz Sharif on Wednesday directed the planning ministry to devise a framework, said Iqbal.

Overall, Pakistan and China expressed satisfaction over the energy projects during the sixth JCC meeting.

The JCC noted that 12 projects including the Sahiwal coal-fired power plant and Port Qasim coal-fired plant were under construction or nearing financial close. Investment in these projects with total capacity of 8,130MW will reach about $16 billion.

The planning minister said China and Pakistan had agreed to revive the 300MW Gwadar electricity project as many commercial activities at Gwadar city were linked with completion of the project.

During the JCC meeting, both the sides noted the importance of early implementation of the Gwadar imported coal-based power project for fast-track development of the Gwadar Industrial Economic Zone.

It was agreed that to ensure early implementation of the project, the Private Power and Infrastructure Board would issue a Letter of Intent within three days after the submission of required bank guarantees.

Agreements will be signed within three months after the issuance of Letter of Support to China Communication Construction Company or its nominee subsidiary with a view to starting work by March 31, 2017.

However, the JCC expressed concern over the slow pace of progress on the Eastbay Expressway of Gwadar Port and New Gwadar International Airport.

Zardari says his party pioneered CPEC

The planning minister, however, clarified that China required more time for completing procedural formalities for the airport and expressway.

During the meeting, Pakistan also requested China to accelerate implementation of the airport and expressway projects, which were critical to the development of Gwadar as a port of international standing.

Published in The Express Tribune, January 5th, 2017.

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Reader Comments (15)

  • Truth
    Jan 5, 2017 - 9:08AM

    China has begun its first freight train service to London from Yiwu, a famed wholesale market town in the eastern province of Zhejiang. The train will travel for 18 days over more than 7,500 miles (12,000 km) to reach Britain from China. It will pass through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France before arriving in London. So China does not need Pakistan to reach Europe.China will also not use Gwadar for oil transportation since transporting oil is cheaper by sea route to East China where major Chinese population and industries are located. How are we going to pay back the loans. Recommend

  • Ali
    Jan 5, 2017 - 9:11AM

    When I read the headline, it was all gloomy. But when I read the article, things are looking pretty good. Why so much negativity? Why can’t the positives be highlighted as well?Recommend

  • Sabi
    Jan 5, 2017 - 10:39AM

    Chinese and Pakistani leadership has expressed their satisfaction over the pace and viability of the ongoing projects and that is enough for us.
    @Truth:
    Chinese are not stupid.Recommend

  • professor iqbal
    Jan 5, 2017 - 11:19AM

    Seems like the wheels are coming off even before the vehicle started moving. Typical of Chinese made products. We only hear one announcement after another. We like to hype everything. At this rate load shedding is here to stay for the next few decades and is part of our life and culture.Recommend

  • JS
    Jan 5, 2017 - 11:37AM

    We must be the dumbest and most and most forgetful nation on earth. Capacity is not the problem for Pakistan energy. We already have more installed capacity (22,000 MW) than we require (16,000 MW)….Recommend

  • Raj - USA
    Jan 5, 2017 - 12:27PM

    Earlier I was thinking that CPEC was not good for India. However, now I am starting to think that CPEC would bring India benefits. Let me explain.

    China is extremely concerned what Trump would do to China. Trump has already signed that he is going to reverse on One-China US policy. He had a telephone conversation with Taiwan’s Prime Minister and may well invite her to his inauguration ceremony when be takes office as President of USA on Jan 20. Trump may also target trade and impose steep tariffs on US imports from China. Trump may also support independent Tibet. China is deeply concerned on these and has started to threaten Taiwan by conduction naval exercise close to Taiwan and increasing its military presence in Tibet. EU is also issued warnings to China on its unfair trade practices. China is having problems with its investments in Sri Lanka and Mauritania. China is facing problems worldwide and has many concerns. China tried to show off its power to US by seizing its underwater drone only to chicken out and hand it back to US immediately after one strong rebuke from Trump. Everyone expected Trump may not follow through on promises he made during his election campaign But, so far, Trump has demonstrated that he will follow through on all promises he made during his election campaign. Opposition for CPEC is growing within Pakistan itself.

    China never expected that it will face problems with CPEC because it counted on Pakistan’s army establishment and political leadership. However, realizing the problems it is facing in Pakistan and knowing well that if CPEC fails it will wipe out completely whatever clout China has in trade and as an economic power. I have said many times earlier in my comments in ET that India alone cannot do much damage to CPEC, but with US support India can do a lot.

    Pakistan and China had the 6th JCC meeting on CPEC just a few days ago in Beijing. China would have asked Pakistan to mend its relationship with India. In other words, China would have asked Pakistan to forget its Kashmir stance and also eliminate all Pakistan based terrorist groups that are targeting India. This is the reason that Pakistan’s military establishment and civilian government are now saying that they want to try diplomacy and better their relations with neighbors. In essence, China is delivering Kashmir and Pakistan based terrorist groups to India so that it can save its interests in CPEC. I would say that China will no longer oppose India’s membership at NSG and we would see a changed China in the forthcoming NSG meeting. For China, Modi on one side and Trump on another side, make the perfect storm.Recommend

  • Lumdheeng
    Jan 5, 2017 - 1:00PM

    @Sabi Chinese are not stupid but good at making counterfeit goods.Recommend

  • Sharath Chandra
    Jan 5, 2017 - 1:09PM

    China should consider asking for 50% seats in parliament, then all the politicians will wake up.Recommend

  • BrainBro
    Jan 5, 2017 - 2:07PM

    @Sabi Actually the Chinese are stupid. Their entire system is based on secrecy. No one really knows what is going on, other than a small group of people sitting in Beijing. There is nothing wrong with CPEC, as long as the relationship is based on “self-interests” not on “rhetoric,” which is currently the case here.Recommend

  • aqib
    Jan 5, 2017 - 2:27PM

    @Truth:
    Gawadar is one part of one belt one road project. Its not everything. But it is still very importnat for China (as well as Pakistan). Let me explain how I am too lazy to Google and give comprehensive points.

    ….

    First of all, No country can be superpower without ports. China is aiming to be a superpower.
    Secondly, sea is always cheaper than Land.
    Thirdly, Gawadar is primarily for Middle East and African region..
    Fourthly, the train has to pass from dozen of countries to reach London, what if just one country get into war like Ukraine? Wont it be like Suez Canal crisis when Egypt used its card to halt trades between Asia and Europe?Recommend

  • Truth
    Jan 5, 2017 - 3:58PM

    @aqib: Sea is cheaper than land. True. So China will transport goods through sea to East China( Most Chinese population and Industries are in East). not through CPEC. Recommend

  • Jameel
    Jan 5, 2017 - 4:34PM

    @Raj Why all Indians are so worried about Pakistan when it comes to CPEC. Pakistan and China knows better what is in their best interests, so guys you please don’t poke your nose on Pakistan internal affairs. ThanksRecommend

  • Rahul
    Jan 5, 2017 - 6:15PM

    @Jameel:
    The corridor runs through Indian territory of J&K so it becomes India’s business automatically.Recommend

  • curioius2
    Jan 5, 2017 - 8:42PM

    Seems nobody ever sits down and properly plans a project. Power plants need land, fuel, transmission lines, and any businessman would perform an economic analysis to insure that the whole project makes economic sense. None of that seems to happen in Pakistan. What’s up with that?Recommend

  • Mike Singh
    Feb 22, 2017 - 5:02PM

    It’s good that Pakistan will no longer be saddled with power cuts and outages. However, considering the energy projects’ financial viability, seeing the huge interest to be paid as well as the capital, to Chinese companies who themselves have borrowed from the Chinese Central Bank and other lending institutions, the cost of electricity to the ordinary consumer would shoot up to about Rs18-20 PKR per unit, almost double of what it is now. For industries, it would probably be in the range of Rs25 to Rs30 per unit.So the bottom line is: would this be affordable to the ordinary Pakistani? Industries will also find it unaffordable resulting in them going bust. Further, why has Pakistan accepted Chinese discarded polluting and inefficient coal fired plants when they themselves are converting to clean nuclear energy? Has anyone given a thought to this?Recommend

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