To meet energy needs: Pakistan, China to establish Special Purpose Vehicle

Finance Minister Ishaq Dar in a meeting with the Chinese officials on Saturday. PHOTO: PID

ISLAMABAD:  As a measure to ease the deepening energy crisis, Pakistan and China may soon establish a specialised company to construct the 1,100-megawatt (MW) Karachi coastal nuclear power project that would aid the work being completed on a fast-track basis.

The issue of setting up a Special Purpose Vehicle (SPV), a company being set up to achieve limited objectives, was discussed during a meeting between the Finance Minister Ishaq Dar and Chinese Ambassador to Islamabad, Sun Weidong, according to officials.
The meeting was also attended by Pakistan Atomic Energy Commission (PAEC) Chairman Ansar Pervez and Attorney General of Pakistan Salman Butt.

The officials said that China also agreed to release a loan tranche of $330 million for carrying out work on the project. The PAEC will build the power plant Karachi Coastal Power at an estimated cost of $9.5 billion or Rs958 billion with the help of Chinese assistance. Out of the total cost, China will provide a loan of $6.4 billion.
It will be the second mega project after Chashma 3 and 4 power plants, known as C3 and C4, which are also under way with the help of China. Beijing is providing $1.3 billion out of the total cost of $1.9 billion of C3 and C4.

In an attempt to increase power generation, Pakistan is turning its attention to producing nuclear energy on a relatively bigger scale. According to the Energy Security Action Plan, the share of nuclear power will be increased in electricity production by installing 8,800MW nuclear power plants by 2030.
Nuclear plants will provide electricity at cheaper rates compared to power produced from thermal sources. At present, the country is experiencing a widening gap between power supply and demand, leading to extensive outages that disrupt life and business and shaves 3% off economic growth annually.
For Karachi Coastal Power, the government has allocated Rs12.2 billion in the budget for the next financial year 2014-15, beginning July. The officials said both countries decided to set up a project specific company as the government cannot spare Rs100 billion to Rs125 billion each year out of the thin federal Public Sector Development Programme.
They added the rupee component will still be shown in the PSDP. However, it was not immediately clear whether the $6.4 billion loan will be the liability of the company or the Pakistan government.
The government has decided to adopt a fast-track policy for the implementation of the projects starting with the Chinese cooperation, an official handout of Ministry of Finance quoted Finance Minister Ishaq Dar as saying.
It added as the country was experiencing a gap between power supply and demand, there was a need for early completion of ongoing energy projects which can help tackle energy shortages.
Dar stated that that these efforts were not only creating attractive opportunities for Chinese investment but new avenues of employment and trade were also opening for the people of Pakistan.
The Ambassador discussed avenues for enhancing bilateral cooperation in various fields between the two countries and appreciated Pakistan’s plans for the development projects initiated by the present government, the handout stated.