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Sahiwal coal-fired power plants feared closure on non-payment of dues

By Munawar Hasan
April 03, 2018

LAHORE: Chinese-owned Sahiwal coal-fired electricity project, having 1,320 megawatts generation capacity, has neared the brink of closure within nine months of its operation as government couldn't settle Rs20 billion in power dues of the project, corporate sources said on Monday.

The sources said the government has yet to pay around Rs20 billion of the outstanding amount to the management of coal-fired power plants, which are helping in bridging gap between demand and supply with cheap power.

“Against monthly payments of Rs10 billion, the government is only clearing partial payments, which may hamper power production,” a project’s official said, requesting anonymity. A spokesman of power ministry argued that government is making payments to Sahiwal coal power company. “Seventy nine percent of outstanding amount has been paid till today,” he said, declining to share other details.

Sahiwal coal power project, which is the first energy sector’s initiative under multibillion dollars China-Pakistan Economic Corridor (CPEC), was built with the cost of $1.6 billion. Construction on the project started in March 2015. The first generating unit of the Sahiwal power plant was inaugurated in May last. The second unit was put online in late 2017. The project was completed in a record period of 22 months.

A joint-venture of China’s state-owned Huaneng Shandong Electricity Limited (owning 51 percent of stake) and textile firm Shandong Ruyi Group (holding 49 percent stake) built the project on a build, operate and transfer basis. The plant’s ownership will be transferred to the government of Punjab after 30 years of operation.

Appalled by rising receivables, the project’s management raised issue of non-payments with the authorities through diplomatic channels, officials said.

The management is facing a double whammy of ensuring uninterrupted coal sourcing and its smooth supply from port to upcountry. Major chunk of income is spent on coal buying and freight charges. “Pakistan Railway demands advance payment for coal transportation,” an official added.

Officials said that giant coal power plant in Qadirabad, established more than 1,000 kilometres from the port, faces biggest financial challenge in early period of operation.

“At the time of its inception, consistent supply of coal from port to upcountry has been conceived as the biggest challenge to survival of this new form of energy generation,” an official said. “The risk in transportation was huge given the logistic issues relating to mammoth quantity of coal. However, this cumbersome task, which was never done before in the country, is now adequately being carried out by Pakistan Railways round-the-clock with the help of dedicated staff and state-of-the-art engines and rolling stock.”

China is one the world’s most high-tech countries in thermal power generation. Sahiwal power plant is first of its kind supercritical coal-fired power plant in the country having highly efficient machinery for controlling pollution and carbon emissions.

CPEC initiative envisaged more than $50 billion investment in major infrastructure projects over a 10- year period. Of that, energy projects are estimated at $38 billion, aiming to add 17,045 megawatts to grid.