Sagacious decision

Apart from human health related dangerous issues, more than a dozen imported coals based thermal power plants to be executed under CPEC were not financially viable because of highly inflated Capital Expenditure and agreed power tariff by the previous government.. The estimated cost of thermal power projects was $ 22 billion plus. Pakistan Tehrik-i-Insaf government has decided to sleeve a major power project pushed by the Pakistan Muslim-N regime.

A news story published in a leading English daily News Paper states that Islamabad has officially conveyed to Beijing that it is no more interested in the 1320 MW Rahim Yar Khan Power project. The reason cited is that sufficient power generation capacity has already lined up for the next few years and Chinese friends have been told to delete the power project from the CPEC list.

During the 8th Joint Coordination Committee meeting held last month, a Pakistani delegation led by Minister for Planning and development Makhdum Khusro bakhtiar “proposed to remove the Rahim Yar Khan imported coal fired power plant from the CPEC list in order to provide structure optimisation space for the domestic power market and avoid the capacity trap. The project had a dominant factor of vested interest at the expense of environmental and health issues. It was originally pushed as imported coal based power plant by Quid-i-Azam Thermal Company of the Punjab government led by former Chief Minister Shabaz Sharif who used to attend meetings of Cabinet Committee on Energy presided by the then Prime Minister Nawaz Sharif. A leading business tycoon had pushed the project and was expected to be one of the key sponsors. A number of IPPs are owned by business tycoons who are close to PPP and PML-N leadership. These diesel and furnace oil fired power plants are a major cause of swollen circular debt because of 40 percent payment made for the idle capacity.

In Western countries the governments are gradually abandoning thermal power generation from coal. Although Germany is using the most sophisticated technology in coal fired power plants with built in carbon scubbles to minimise the emission of carbon monoxide content in the air yet such power plants are being closed. The 13 coal fired power plants that China was going to install in Pakistan were not of advanced technology and a female columnist has to write a sarcastic column in a leading Urdu daily newspaper “Cheen ka dhowan Pakistan main.”Translation: Importing Chinese smoke into Pakistan.

The construction cost and the tariff charged by the operational Chinese thermal power plants are on high side. The PML-N government made shady deals with Chinese companies for coal based thermal hydro-power generation at the expense of the country and its people. Capital expenditure ( Capex) for the coal projects was about 40 percent higher than the international cost and coal power tariff was 8.4 cents per unit as compared to a tariff in many jurisdictions of five cents and below. In the meantime more evidence has emerged against irrational coal tariff that Chinese power producing companies will charge and for the payment of which the previous government agreed to create a revolving fund in the banking system. Recently there were bids for Jamshoro Coal Power Plant, wherein bids for Engineering, Procurement and Construction (EPC) contracts were one half than the contracts made under the CPEC framework.

Diyamer Basha Dam was also included in the CPEC list but has to be withdrawn because of unacceptable Chinese conditions set for the financing of this multidimensional project. Water and Power Development Authority (WAPDA) Chairman Muzammal Hussain, while briefing the Public Accounts Committee on the status of big storage dams, had told in November, 2017 that Chinese conditions for financing Diyamer Basha Dam were not doable. They wanted ownership of the project, operation and maintenance, its securitization by pledging another operational dam. The international multilateral donors had never set such harsh conditions while financing the Tarbella and Mangla dams, nor the World Bank has imposed any undoable condition against for financing 2160 MW first stage of Dasu hydro power project.

The hydropower projects which are being completed by Chinese under CPEC will alarmingly raise the power tariff in future. A comparative data of different projects shows that per unit cost vary widely. Karot has 2.03 times more the reference cost for Dasu, Kohala 3.31 times, Azad Pattan 3.97 times, Suki Kinari 2.38 times and Mahal 2.50 times. This explains as to why the incumbent government is not that much enthusiastic about Chinese investment in the power sector.