In a first blow to the ambitious plan of attracting $45.6 billion Chinese investment in return for giving Beijing access to the Gwadar Port, the government has put the Gadani Power Park having an estimated value of $14 billion on the back burner.
Due to financial and technical objections raised by China, the government has reduced the scope of the project with a generation capacity of 6,600 megawatts from the planned 10 power plants to four, along with placing the entire project on the low priority list, said Gadani Power Park Deputy Chief Executive Officer Zafar Nasrullah.
Nasrullah was called on Tuesday by the National Assembly Standing Committee on Planning and Development to seek an update on the government’s flagship project that was sold by Prime Minister Nawaz Sharif as a solution to the lingering energy crisis.
The Gadani Power Park was one of the first few mega projects approved by Sharif to address the energy crisis in the medium to long term. Sharif had announced that 10 coal-fired power plants, each having a generation capacity of 660MW, would be set up at Gadani, and promised that they would be completed within five years.
The project is also part of the $45.6 billion investment that China has promised to make in Pakistan in return for access to the Gwadar Port under the China-Pakistan Economic Corridor.
According to the documents of the Ministry of Planning, the total cost of the original project was $13.8 billion. It estimated that 10 power plants would cost $9 billion, each worth $900 million. In addition to this, up to $4.43 billion would be required to lay transmission lines to evacuate electricity and another $1 billion would be needed for jetty and marine-related infrastructure.
Nasrullah said China objected to the high cost of the project and also disagreed with the technical design, he added. The deputy chief said that after the Chinese objections, the government has reduced the number of projects to four, which will also minimise the financial requirement for the transmission lines and jetty infrastructure.
Nasrullah said the Gadani power plants had been placed among seven projects, which will be completed after 2018. He said the government has already spent Rs180 million on conducting various studies for the project.
The prime minister had announced the project with fanfare without preparations that was not feasible from day one, resulting in embarrassment for him, said Dr Nafisa Shah, a member of the standing committee, belonging to the Pakistan Peoples Party.
She said media reports suggested that the project has been shelved – an assertion that officials of the Ministry of Water and Power were not in a position to confirm or deny.
Neelum Jhelum project
Giving a briefing on another important power project, the chief executive officer of Neelum Jhelum hydropower project, General Retired Mohammad Zubair said that the completion of the project, with a generation capacity of 969MW, by the end of next year hinges on the availability of funds.
He said although about 70% of the work was completed, its financial closure could not be achieved so far. The project was facing Rs50 billion financing gap and an amount of Rs14 billion was immediately sought from Prime Minister Sharif to continue work on the plant, he added.
Zubair said out of $1.1 billion funds arranged from foreign lenders, still $581.7 million remained undisbursed, creating financing problems for the project. He said the management was looking for bridge financing from local banks. Zubair said each day delay in completion of the project would cost the national kitty $1.5 million.
Nandipur Power Project
While giving an update on the construction of Nandipur project, the Ministry of Water and Power officials said the deadline to make the 95MW first turbine of the project by January this year was missed due to various faults developed in the machinery. He said the 425MW project may be completed by May this year but it cannot be run on gas at least for two more years.
Published in The Express Tribune, February 4th, 2015.