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February 17, 2009

China to bear 85pc cost of Chashma power projects

World

February 17, 2009

ISLAMABAD: China will provide 85 per cent cost for construction of Chashma Nuclear Power Projects (C3 and C4) by extending suppliers’ credit, paving the way for generating additional electricity up to 680 megawatt over the next seven years to overcome energy shortages in Pakistan, it is learnt.

According to highly placed official sources, Pakistan and China are going to finalise the modalities of the supplier credit for two more nuclear power reactors (Chashma 3 and Chashma 4) in the upcoming visit of President Asif Ali Zardari, who is visiting Beijing from Feb 20.

During the last visit of President Zardari, China and Pakistan had signed a deal for C3 and C4 and now finalisation of related modalities will be on the agenda of the upcoming highest level visit of Pakistani authorities during this ongoing week.

In the Public Sector Development Program (PSDP) for 2008-09, the government had estimated the cost of C3 and C4 worth Rs129.905 billion, with foreign currency component of Rs80.360 billion. The government has allocated Rs220 million for the C3 and C4 in the current fiscal year 2008-09. “The cost of the C3 and C4 has already gone up from Rs129 billion to over Rs140 billion mainly because of depreciation of rupee against dollar in the ongoing fiscal year,” a high-level official in the Planning Commission confirmed while talking to ‘The News’ here on Monday.

China has already installed a 325-megawatt reactor at Chashma and is currently working on another with the same capacity that is expected to begin producing by 2009-10. Pakistan is facing a deficit of 4,000 to 5,000 megawatts, resulting in torturous load-shedding for hours in a day.

According to Energy Security Plan up to 2030, the energy mix is quite crucial for Pakistan and in the future the energy share from nuclear will be increased from 400 MW to 8800 MW till 2030.

The official also confirmed that Islamabad will table its formal proposal before the

Chinese authorities for finalising the provision of supplier credit. Supplier credit means that the Government of Pakistan would give a guarantee to the Chinese government and Beijing authorities would extend its guarantee to its official bank for repayment of the amount. The Chinese companies will complete the work on C3 and C4 and the Chinese official bank will repay the amount when the company will submit the bills after completion of various phases of the project.

The official said that although the government had allocated a nominal amount for C3 and C4 in the current fiscal year’s PSDP, but keeping in view the importance of this project, the government could provide Rs3 to 4 billion before June 30, 2009 in a bid to make this project operational.

Earlier, China had provided financial and technical assistance to Pakistan for the construction of Chashma 1 and Chashma 2 having a capacity of 340 megawatts each. Chashma 2 has not yet been completed and it is expected to start providing 340 megawatts electricity by the end of the next fiscal year.

“These two new units will increase electricity production by 680 megawatts, which will have a positive effect on the Pakistani economy,” added the official. Both plants are expected to be built at Chashma, about 300 kilometers south-west of Islamabad, in the eastern province of Punjab.

When Deputy Chairman Planning Commission, Sardar Asif Ahmed Ali was contacted for comments, without going into details, he said that the government was committed to start work on C3 and C4 within the ongoing year 2009. He also confirmed that China had agreed to extend its supplier credit but he refused to share further details on the subject.

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