Page 6 - AsiaElec Week 06 2022
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AsiaElec INVESTMENT AsiaElec
Pakistan aims to renegotiate
power investment terms
with China
PAKISTAN PAKISTAN is to try to renegotiate the capacity and is a major strategic pivot in Beijing’s Belt and
payments the country must pay for electricity Road Initiative (BRI), with the Mohmand Dam
from power plants built with Chinese support as just the latest Chinese-supported infrastructure
part of the China Pakistan Economic Corridor project under construction.
(CPEC) system. Pakistan is set to float proposals to the Chi-
The Pakistani government said that inde- nese government for renegotiation on contracts
pendent power projects (IPPs) built using Chi- of power projects established under CPEC on
nese support could default on their capacity the pattern of other IPPs or to purchase 1,200
payments because of the rising cost of coal. MW electricity from Pakistan for onward supply
Islamabad aims to save up to an average to Afghanistan, well informed sources in CPEC
$480mn per year; as the IPP contracts are typi- Authority told Business Recorder.
cally for 30 years then savings of up to $14.29bn Imran Khan is visiting Beijing this week,
could be possible. when he is expected to present the proposals.
According to CPEC Authority, over- An alternative option to offset the cost, i.e.
due receivables from CPEC IPPs are now at $0.47bn per year, can be to sell power to China
PKR200bn ($1.14bn), and IPPs may default for further provision of electricity to Afghani-
because of rising prices of coal in the interna- stan, the Business Recorder suggested.
tional market, Pakistan’s Business Recorder Pakistan can offer China the option to
reported. consider providing electricity to Afghanistan
The IPPs may also suspend the operations through Pakistan for 30 years as part of its devel-
of power plants as per suspension clauses of the opment assistance to Afghanistan.
signed power purchase agreements (PPAs). China may buy power from Pakistan under
“[The] Prime Minister will draw attention contract and provide it to Afghanistan either at
of Chinese top brass to the exceptional rise in cost or at reduced rates as per its political terms.
capacity payments because of near simultaneous Pakistan can allocate power from its power
arrival of new capacity from projects undertaken pool to China, the sources said, adding that
under CPEC,” the sources added. China can also offer to lay a transmission line
Pakistani Prime Minister Imran Khan has connecting the Pakistan grid to the nearest point
been informed that if the pacts with the CPEC in Afghanistan and invest in the grid.
IPPs are similarly re-negotiated, then Pakistan The power balance of Pakistan till 2030 shows
could save $14.29bn over the life of these pro- that Pakistan has a surplus power of at least 3,970
jects, which amounts to an average of $480mn MW, which will increase over time.
per year for the average project life of 30 years. The sources said through the sale of 1,200
However, the Business Recorder reported MW to China, Pakistan will earn PKR100bn
that Chinese officials said that reducing the ($570mn) per year from the year of supply of
payment would not be in line with the spirit of power and for 30 years the savings will be to the
CPEC, as it would seriously affect the sanctity tune of PKR3,000bn at current prices.
of contracts signed under CPEC framework Meanwhile, sources in Commerce Ministry
agreement. told Business Recorder that the Prime Minister
While Pakistan is open to Western funding, would also seek support from Chinese leader-
it is also a major recipient of Chinese funding, ship to increase exports by $3bn per year.
P6 www. NEWSBASE .com Week 06 09•February•2022
