The government of Pakistan has decided not to relocate a 300-MW coal-fired power plant from Gwadar to Thar, and has allowed a three-year extension to its financial close amid pressure from Beijing.
Chinese leadership reportedly informed Prime Minister Shehbaz Sharif during his
last visit to Beijing that relocating the power plant would mean a new project, and
China has taken a principled decision not to start any new coal project. Following
the Prime Minister’s return from Beijing, the Chinese Ministry of Foreign Affairs
sought written assurance from Islamabad that it would honour the commitment
made by the Prime Minister to Chinese leadership.
The Private Power & Infrastructure Board, had been pressing the Chinese
company to relocate the project from imported coal at Gwadar to local coal at
Thar. The project is listed as a priority project under the CPEC Energy Agreement
and is aimed at improving the reliability of the local power supply, which would
help to solve problems in the ongoing economic development and urbanisation of
Gwadar Free Zone.
At a recent meeting presided over by the Minister for Planning, Development and
Special Initiatives Ahsan Iqbal, it was revealed that major projects under CPEC in
Gwadar and adjoining areas like NGIA, desalination plants, Pakistan-China
Friendship Hospital, Pakistan –China Technical and Vocational Training Complex,
University Gwadar, as well as, planned projects like Gwadar Oil Refinery, Gwadar
Shipyard have a cumulative power requirement of more than 800 MW. Relocation
of the project to Thar, as well as using local coal, is not viable due to long logistic
lines and cost-benefit analysis, including poor yield, high volatility, frangibility, and
environmental concerns associated with local coal. The Planning Minister was
further informed that relocating an approved project is contrary to Chinese policy,
as no new coal project can be developed or financed. The current project is being
developed given the strategic objectives in Gwadar and the dictates of the
Gwadar Smart Port City Master Plan.
