ISLAMABAD: Chinese and other major lenders are increasingly reluctant to invest in Pakistan’s expansion of coal mines, according to the head of a local producer.
“The real challenge for us is financing,” Amir Iqbal, chief executive officer of Sindh Engro Coal Mining Co., said in an interview to Bloomberg in Islamabad, mentioning China among the backers that have withdrawn their support.
Under the China-Pakistan Economic Corridor, inaugurated a decade ago as part of President Xi Jinping’s Belt & Road initiative, Beijing has been the main supporter of the country’s coal development, fueling 6.6 gigawatts of power capacity in the South Asian nation.
In 2021, Xi pledged to halt all coal construction and financing abroad, but two years later BNEF researchers found that China-based banks remained among the major supporters of the dirtiest fossil fuel.
Prime Minister Shehbaz Sharif is under pressure to build more coal mines to increase energy security and curb inflation. Currently, more than 60% of Pakistan’s total electricity is generated through imported fuel, according to the National Electric Power Regulatory Authority’s latest report. Government intervention is necessary to protect the mining and power sector from mounting debt, Iqbal said.