Sahiwal Coal Power Plant: PML-N Makes Money?

Aftab Ahmed

Islamabad: A close aide of Prime Minister Imran Khan Tabish Gauhar has alleged the PML-N government has reportedly installed a coal power plant in Sahiwal for ‘monetary gains’.

Prime Minister raised a question in a high-level meeting regarding the installation of a coal power plant in Sahiwal, Tabish said that there seems no justification to install this plant in Sahiwal due to the higher cost of coal movement from Karachi.

He further said the PML-N government had over-projected electricity’s demand for electricity to accommodate as many power plants as it could do.

Pakistan to request China paying $2.8b CPEC liability to Banks

Pakistan has decided to request China to fund a $2.8 billion liability from CPEC, dry powder’ to pay their banks.

The PTI government is to pay Rs 435 billion that amounts to a $2.8billion debt principal payment to CPEC lenders during the next three years. The coal power plant in Sahiwal also included in the projects for which Pakistan has to pay money.

Officials said that the PTI government would request the Chinese State to fund this Rs 435 billion liability from the CPEC ‘dry powder’ to pay off their banks according to schedule during the next three years.

The government will recover this amount from the consumers. National Electric Power Regulatory Authority (Nepra) will approve this tariff.

Projects under CPEC

Pakistan is also set to ask China to reduce the rate of return on energy power projects.

Pakistani side says that the PML-N government had awarded CPEC projects to China companies at the highest return rate.

They said that Chinese companies succeeded in getting contracts of power plants at a 30 percent rate of return, which was the highest in Pakistan’s history.

They further said that the highest return rate for Power plants in Pakistan had been 18 percent. However, the return rate given to Chinese companies for setting up power plants was almost close to double in Pakistan.

Pakistani side had taken up the matter through a diplomatic channel to reduce the rate of return. However, the Chinese side had not agreed in this regard.

At present, the government has reduced the rate of return of other power plants under different policies from 17 to 13 percent. However, the Pakistani side had not touched CPEC projects, fearing that such practice could irritate the friendly country.

Now, the government of Pakistan wants China to reduce the rate of return.

Officials said that the top leadership of Pakistan would take up the matter with its Chinese counterpart.

The inquiry committee on Power had also raised a question about coal-based power plants the PML-N government had set up under the China-Pakistan Economic Corridor (CPEC). They set up two coal-based power plants in Sahiwal and Karachi.

Pakistan and China set up these power plants under the Power Policy 2015. The committee had pointed out that a review of these two power plants indicated that one of them had recovered 71% of investment in just two years. Furthermore, the second power plant recovered 32% of investment in only one year of operation.

It further pointed out that the previous government had offered a 17% rate of return in dollars for energy projects including the coal power plant in Sahiwal, which amounted to 27%. Owing to the depreciation of the rupee against the dollar, the rupee rate of return had jumped up to 43%.

Now, the PTI government wants to renegotiate it with the Chinese government to reduce the rate of return. The government argued that it would make Rs 30 billion savings to reduce the tariff of the consumer.

Cold Relation between Pakistan and China

PTI government and China have not enjoyed warm relations soon after the former assumed charge.

Prime Minister Imran has been grilling former Prime Minister Nawaz Sharif over corruption. Sharif has been enjoying good relations with China, which enabled the execution of multibillion dollars projects.

Communication Minister Murad Saeed had also alleged corruption charges in the Multan Sukkhar motorway project. It had annoyed the Chinese side.

Officials further said that the Chinese side had invited Prime Minister Imran Khan to visit a project under CPEC. However, the premier did not take any interest.

The recent statement of the Chinese foreign minister in Iran shows how two countries are enjoying relations.

Chinese foreign minister Wang Yi had said in Tehran that Iran was not like some countries that change their position with one phone call. Critics have said that the Chinese foreign minister pointed fingers at Iran by making such a statement.

In such a situation, Pakistan will not take any unilateral decision regarding the reduction rate of return of Chinese energy projects which also included the coal power plant in Sahiwal.