July-May: Rs48b spent on Karachi’s nuclear power plants

Published: June 28, 2015
Pakistan has taken IMF into confidence about the revised accounting treatment of spending on K2 and K3 and Rs48 billion spending is now excluded from outgoing fiscal year’s Rs525 billion PSDP.

Pakistan has taken IMF into confidence about the revised accounting treatment of spending on K2 and K3 and Rs48 billion spending is now excluded from outgoing fiscal year’s Rs525 billion PSDP.


Despite all difficulties, Pakistan is steadily continuing its nuclear energy programme with the help of China. The country has spent Rs48 billion during the last year on two Karachi nuclear power plants that have a combined generation capacity of 2,117 megawatts.

From July through May of the outgoing fiscal year, China extended loans amounting to $477.3 million or Rs48 billion for the two nuclear power plants, K2 and K3, according to the Economic Affairs Division (EAD). The money has been given to Chinese suppliers of the power plants.

The total cost of these two power plants is $9.5 billion including the $6.5-billion foreign financing component. The projects were planned during the tenure of Pakistan Peoples’ Party but were approved by the PML-N government in July 2013.

China and Pakistan signed loan agreements for both power plants early last year. Officials said both sides have also agreed to modify the agreements to change the borrower from government of Pakistan to Pakistan Atomic Energy Commission (PAEC).

Read: Nuclear power plants: ‘Production to be raised to 40,000MW by 2050’

However, the federal government will be the guarantor and responsible to return the loans. The modifications have been introduced aimed at keeping the huge spending outside budgetary books.

Had the government booked the expenses on nuclear power plants on the budget, it would have been impossible for it to keep the budget deficit around 5% of Gross Domestic Product in the outgoing fiscal year, ending on June 30.

The issue of treatment of spending on Karachi nuclear power plants remained unresolved during last year. The Ministry of Finance was reluctant to book $9.5 billion spending on its books.

To resolve the issue, many back and forth meetings were held between Finance Minister Ishaq Dar, Director General Strategic Plans Division and the PAEC.

Sources said Pakistan has also taken International Monetary Fund (IMF) into confidence about the revised accounting treatment of spending on K2 and K3. The Rs48-billion spending is now excluded from the outgoing fiscal year’s Rs525-billion Public Sector Development Programme.

According to the Ministry of Finance’s budgetary books, for the outgoing fiscal year, the government has estimated receiving Rs87.7 billion loan from China for both the nuclear power plants. The PAEC, which is handling the nuclear power plants, has sent a fresh withdrawal request to the Chinese authorities. The authorities are anticipating that the remaining Rs39.7 billion will be received from China before June-end.

Read: Nuclear power plants: Can’t give a year to review report, says SEPA director

For the new fiscal year, beginning from July, the government has estimated receiving Rs121 billion loans for both nuclear power plants from China. The authorities are planning to complete both projects by 2024 aimed at meeting the growing energy needs of the country.

At present, Pakistan is generating only 665MW of electricity from nuclear sources. The government has estimated that another 340MW will be added to the national grid by next year, as Chashma-III nuclear power plant is nearing completion.

The Chashma-IV, also having 340MW generation capacity, is expected to be completed by 2017. In total, 2,880MW nuclear power plants are at various stages of completion.

Last year, PAEC Chairman Ansar Parvez, had briefed the media about his agency’s plan to progress the country’s peaceful civil nuclear programme for meeting the energy requirements. He had said that despite facing various kinds of embargoes, the authorities have planned to install 42,000MW through nuclear power plants till 2050.

Published in The Express Tribune, June 28th, 2015.

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Reader Comments (22)

  • Sandip
    Jun 28, 2015 - 5:50AM

    42,000 MW by 2050? Are the pakis thinking that China will be spending their entire foreign exchange reserves on Pakistan only? Are they beholden to Pakistan for something?Recommend

  • Baloch
    Jun 28, 2015 - 9:59AM

    That’s China’s and Pakistan’s problem, not India’s. Focus on the 600 million Indians who defecate out in the open. Recommend

  • Omair
    Jun 28, 2015 - 10:30AM

    Dear Sandip,

    China is Pakistan’s true friend which India just got to know when China vetoed their anti-Pak recommendations recently.

    And please keep your poison on pages of Indian newspaper only. Dont bring your hate and jealousy here. Thanks.Recommend

  • Jun 28, 2015 - 11:13AM

    @sandip: let the chinise think about where they want to spend their money. so far they are more successful than indians as businessmen. Recommend

  • abreez
    Jun 28, 2015 - 11:29AM

    I’m worried about world’s biggest poverty that will remain world’s biggest poverty because now when world is heading towards an arena where country to country relationship will matter, Pak-India relationship will start from Pak-India border and after some hours will end there.
    World economy may be slipping into 1930s-type Great Depression: Raghuram Rajan
    Jun 26, 2015
    LONDON: RBI governor Raghuram Rajan has asked central banks from across the world to define “new rules of the game” as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s.

    He expressed concern that the world may be slipping into the kind of problems of the depression of the 1930s and an international consensus was needed to be built over time.
    “We need rules of the game in order to effect a better solution. I think it is time to start debating what should the global rules of the game be on what is allowed in terms of central bank action,” he said at a London Business School (LBS) conference here on Thursday evening.

    “I am not going to venture a guess as to how we establish new rules of the game. It has to be international discussion, international consensus built over time after much research and action,” Rajan said.

    “But I do worry that we are slowly slipping into the kind of problems that we had in the thirties in attempts to activate growth. And, I think it’s a problem for the world. It’s not just a problem for the industrial countries or emerging markets, now it’s a broader game,” he noted.
    The RBI governor was addressing the ‘perspectives’ conference organized by AQR Asset Management Institute at the LBS campus on the subject of ‘the central banker perspective’.

    He highlighted the tremendous pressure for growth which in turn creates enormous pressure on central banks to take action.

    Rajan stressed that seven years on from the economic crisis, the central banks have done a lot during as well as post-crisis.

    “The question is are we now moving into the territory in trying to produce growth out of nowhere we are in fact shifting growth from each other, rather than creating growth. Of course, there is past history of this during the Great Depression when we got into competitive devaluation,” he warned.

    Rajan also highlighted the need for countries to work together on capital flows, “We have to become more aware of the spill-over effects of our actions and the rules of the game that we have — of what is allowed and what is not allowed — needs to be revisited,” he said.Recommend

  • shafiq
    Jun 28, 2015 - 12:05PM

    @ Sandeep. Here is the stark difference in manners we give our response. The key word is civility. Compared to Times of India where Indians use all kind of vulgarity n dirty languages towards Pakistan n Muslims. I guess with such behaviour Indian superiority complex will last forever.Recommend

  • Tyggar
    Jun 28, 2015 - 12:28PM

    Maybe you do not know the difference between unmoderated and moderated boardsRecommend

  • Tyggar
    Jun 28, 2015 - 12:35PM

    Rajan is talking about global economy not Indian economy. He is known to have predicted the global downturn in 2008 as well.

    India is well placed with a record foreign exchange reserves to weather the storm, it is the fastest growing economy in the world uplifting huge number of people out of poverty. Whereas Pakistan with less economic growth and more population growth is getting poorer by the day. . You should be concerned about the charity economy of Pakistan. Global downturn will make alms difficult to come by. Pakistan is a leech economy with no positive contribution to the global economy. Hence India is going ahead with integration with all the economies in the region that are actually significant.Recommend

  • H. Khan
    Jun 28, 2015 - 12:39PM

    Yes the fact is only 8,00,000 Pakistani file their tax returns and out of this number baout 2,50,00 declare NIL income.From where can the government get resources if people do not pay taxes?
    So the government has to borrow.
    Why not do a detail article about the taxes people pay.Tax Reform Commission interim report has done detail analysis of the break up of tax return filers
    But the present article is well researched.CongratsRecommend

  • Just Human
    Jun 28, 2015 - 1:03PM

    u got some sense Recommend

  • Aslum
    Jun 28, 2015 - 2:42PM

    Nuclear power will be essential in the long term to assure Pakistan’s energy independence. However, the capital cost of installing nuclear plants is high and the most advanced reactors — from France, Japan and South Korea — are unlikely to be sold to Pakistan. Once China develops the most advanced reactors, and Pakistan’s financial position is stronger, the expansion of nuclear power will become a realistic option for Pakistan.Recommend

  • reader
    Jun 28, 2015 - 6:02PM

    This is the exact best spot to locate a nuclear plant in Pakistan. Although nuclear plants can be made to be earthquake-resistant they cannot be made to be tsunami-resistant. (Nothing can.) Karachi is on the fault lines of three different tectonic plates. It is also by ocean. Tsunamis are created be earthquakes taking place underneath ocean. Therefore Karachi and surrounding areas are possibly vulnerable to tsunamis. Any nuclear power plant will also be damaged or destroyed. In the largest and densest city of Pakistan. Comprising half of Pakistan’s economy and wealth.
    Of course, this is most ideal spot for the plant, no better spot could be conceivable. Not even where there is no ocean and chance of tsunami, or no seismic fault lines and chance of earthquake, and a part with few people and economic activity. No sir this is the only acceptable spot in all of Pakistan for a nuclear plant…Recommend

  • Sandip
    Jun 28, 2015 - 9:26PM

    @Omair: We have seen US support for Pakistan in 1971 when Pakistan was the beneficiary of many such vetoes against it’s wrongdoings by the US. The net result was the breakup of Pakistan into two. Chinese veto may save Pakistan temporarily from UN sanctions, but it will not protect Pakistan from the snakes that the Pakistani establishment has bred for use against India and Afghanistan. If Pakistan continues this policy and China keeps supporting it, a stage will come when India will say enough is enough and go in for a more direct action. And believe me, for all its bluster, neither China nor pakistani nukes will be of any help to Pakistan.Recommend

  • catious
    Jun 28, 2015 - 10:58PM

    The modifications have been introduced aimed at keeping the huge spending outside budgetary books.
    Bookkeeping gymnastics doesn’t change reality – deficit spending is deficit spending and defeats the whole purpose of budgeting.Recommend

  • THE
    Jun 29, 2015 - 3:17AM

    I request my Pakistani brothers to not indulge Indian trolls like Sandeep in any kind of conversation. They come here because they can’t get a proper job but have all the negative vermin to spew against their neighbor. It’s a shame that they can’t concentrate on fixing their own problems but use every iota of their brains to discuss Pakistan’s issues. Maybe, they are holding something in their stomachs that they can’t release due to the lack to toilets in their country ? Recommend

  • Baila
    Jun 29, 2015 - 11:33AM

    Nuclear power is environment friendly and doesn’t cause noise pollution like wind turbines. There is no release of greenhouse gases (carbon dioxide, methane, ozone, and chlorofluorocarbon) during the operation of nuclear power plant. High amount of energy can be generated from a single nuclear power plant. Nuclear power reactors are expensive to build but they are relatively cheap to operate. Nuclear power plants operate reliably and have a continuous output of power. In order to make the country sufficient enough in fulfilling the rising energy demands , this is quite necessary to put focus on increasing the demand of nuclear power. China being a loyal friend this time also assisting Pakistan to fill up its larger energy deficient gaps. Recommend

  • Rahima
    Jun 29, 2015 - 12:05PM

    At present, Pakistan has experienced one of the severest heat waves of the history. Things get much worse when there is an acute power shortage. Karachi has become a victim in this summer both in respect of severe heat and energy shortfall. Keeping in view this context, Karachi nuclear power plants appear to be symbolic for viable source of energy generation. With the collaboration of China, Pakistan Atomic Energy Commission (PAEC) would be able to generate 2200 MW energy for Karachiites. These nuclear power plants are going to meet up the energy demands of not only present but also for future energy needs. Recommend

  • Amina
    Jun 29, 2015 - 12:08PM

    Karachi Nuclear Power Plants would be instrumental in ending up severe energy crisis and give relief to common masses which are suffering very badly from hot summer and power shortfall. Nuclear is one of the most viable and sustainable option to generate energy. Pakistan is into nuclear from many decades and civilian nuclear usage would be productive for economic development ad prosperity. Recommend

  • Rabia
    Jun 29, 2015 - 12:32PM

    We must realise this now that nuclear power is essential for Pakistan to meet its energy needs. This will also help in resolving our socio-economic challenges. The biggest benefit is country’s economy in general and Karachi in particular will accrue in the long-runRecommend

  • Peace
    Jun 29, 2015 - 12:39PM

    Again, what are we doing to help those affected by the heat wave in Karachi. How does Nuclear power help?Recommend

  • powvow
    Jun 29, 2015 - 8:03PM

    This is outrageous.. A country infested with terror and unable to contain it, is raising up its nuclear ante causing instability in the region.
    God forbid if any of this nuclear material falls in the hands of one of those armed groups, it has no control over.Recommend

  • Shahid
    Jun 30, 2015 - 2:39AM

    Karachi is badly in need of electricity as the privatized company K-electric has failed to meet its objectives. Recently the Chairman has also resigned from its position, amid the tensions of load shedding. Nuclear energy is cheap way to produce enough amount of electricity for long term and it is good to see that government is quickly constructing the plants to meet the energy demands. Let’s bring back the lights of Karachi!Recommend

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