Chapter, 3.

Impact of CPEC on Energy Sectors of Pakistan.

Introduction
Pakistan was the mere Muslim state to acknowledge People’s Republic of China in 1949. But good
friendly relations between the two countries had been started since, when they signed border
agreement in 1963. After the visit of Xi Jinping in 2015, the relations jumped from normal military,
economic, and diplomatic, to strong regional connectivity. Xi Jinping launched China Pakistan
Economic Corridor, a gigantic part of his One Belt One Road(OBOR), a global strategic ambitious.
On 20 April 2015, Pakistan and China a total of 51 Memorandum of Understandings(MoUs) were
signed to commence work on the $46 billion agreements, which is roughly 20% of Pakistan's
annual GDP. CPEC, a project aimed to become an economic game changer for not only the partner
countries, Pakistan and China but also for the whole region. This project is focused on developing
multiple infrastructure projects throughout the country (Rizvi, 2015).
The whole project of CPEC can be roughly divided into three main categories which are the
transportation networks, energy projects, and creation of trade zones. As far as the energy sector
is concerned more than $33 billion worth of projects are planned to be constructed in the country.
The initial target is to fight off the shortfall of roughly 6000MW until the end of 2018 by adding
about 10,000MW energy into the grid through a series of developments labelled as “Early Harvest”
projects. As per the energy cooperation agreement, in supplement of the agreement on the China
Pakistan Economic Corridor, the agreement on Energy Projects between both the Governments has
been signed on 8th Nov, 2014 (Ibed).
The total installed capacity of the projects was listed as 17,045 MW. It was also agreed to ensure
the projects operational by the agreed timeline, 2030. It aims to eradicate the energy crisis of
Pakistan which from a long time is one of the major hurdles in the economic growth of the
country as from years the shortfall of energy keeps on growing despite multiple efforts made by
different governments (Twangar H.Kazmi, 2016).
There are a total of eight projects in Punjab, four in Sindh, two shared between Punjab and Sindh,
two in Balochistan and one in Khyber Pakhtun Khwa being constructed under Early Harvest policy.
The major sources being considered for long-term development of electricity in the country
including hydropower, coal, liquefied natural gas, wind power and solar plants. Predominantly,
these projects will be tentatively completed within three to 15 years. The projects that are aimed
to be constructed will be developed by Independent power producers instead of the
governments of the two countries and Pakistan’s government will be contractually obliged to buy
electricity from them. The major bank involved in financing the projects is China’s Exim
Bank(CEB). This investment will impact greatly on the energy sector of Pakistan and will bring
sustainable energy development by 2030 (Planning Commission, 2016).
So, CPEC related energy projects between China and Pakistan, are discussed in following two
categories:
Renewable Energy Projects Under CPEC:
A total of 51 Memorandum of Understandings (MoUs) were signed in diverse sectors between
China and Pakistan during the visit of Chinese president to Pakistan on 20 April 2015. In
supplement of the agreement on the China Pakistan Economic Corridor, the agreement on ‘Energy
Projects’ between both the Governments had been signed on 8th Nov, 2014, termed as ‘Energy
Cooperation Agreement’. As per the energy cooperation agreement, the total installed capacity of
the projects was listed as 17,045 MW. It was also agreed to ensure the projects operational by the
agreed timeline, 2030(Salman Amin, 2018).
The renewable energy projects under CPEC will play a pivotal role in promoting low carbon
development in the economy of Pakistan. , As discussed earlier, the Chinese government
consciously promoted renewable energy in China, realizing the negative impact of fossil‐fuel
based growth. Pakistan intends to invest in coal power generation facilities in Pakistan.
Lessons from China’s journey in the renewable energy will definitely have a profound impact
on Pakistan. At the onset, where Pakistan has initiated expansion in energy generation
capacity, investments in solar and hydro power generation can be seen. Non‐hydro
renewable energy became a significant part of China’s mix only after 2005. For Pakistan, this
has started at the very beginning of Chinese investments in energy, hinting towards the tacit
transfer of wisdom between the economies(Ibed).
Renewable energy projects under China-Pakistan Economic Corridor are discussed below:
Solar Energy Project:
The solar energy project that is under CPEC, is now finalized and under construction include the
Quaid-e-Azam Solar Park near Bahawalpur, Punjab province, was targeted to produce 1000MW
by the end of 2018, and will add to the national grid. This solar park is said to be the largest in the
world and certainly the largest in Asia. There will be considerable impact of this investment on
the local industry of renewables in Pakistan. As in the case of the 100MW pilot stage a Chinese
company shall build the remainder 900MW of the solar farm. Repair and maintenance
requirements of these panels will trigger the need for ancillary industries to spur into existence in
the long‐run. The scale of this project is very ambitious to the extent that some experts have
cautioned entering into uncharted territory. Caution is indeed necessary under such circumstances,
but openness unforeseen opportunities must also be kept in mind. This scale will also provide the
local industry of Solar Photovoltage(SV), a running model of producing and distributing
electricity, to learn from and possibly replicate. Such conditions may result in the enhancement of
local production capacities. Future projects by the government may even by sourced to local
companies, provided they acquire the necessary know‐how and skills(Dent, et al,2016).
Wind Power Projects:
The China Pakistan Economic Corridor (CPEC) has contributed 300MW of clean wind energy to
the national grid through its four early harvest wind power projects. The four wind projects that
had been completed under CPEC and are connected with the national grid include Dawood wind
power project (50 MW), Sachal Energy wind farm (50MW), three gorges second wind farm project
(100MW), and UEP wind farm project (100MW)( Times of Islamabad, 2019).
Dawood wind power project is a prioritized or early harvest project under CPEC , which installs
33 wind turbine generators with the capacity of 1.5MW per unit and total capacity is 49.5MW on
1,720 acres of land in the coastal area of Gharo wind corridor in Bhanbore, District Thatta, Sindh.
This is a direct investment (FDI) project and total investment of Dawood wind power project is
US $115 million. The rate of equity to loan is 30 percent:70 percent. Dawood wind power project
achieved Commercial Operation Date (COD) on April 4, 2017 and annual electric power supply
to the National Grid is more than 130GWh, which is sufficient for daily use of 100,000 Pakistan
families and is effectively easing the crisis of electricity shortage in Pakistan(muhammad saqib,
Xin, 2018).
Sachal wind power project was completed in April 2017 at a cost of $110 million. It is located in
Jhimpir, Thatta district, Sindh province, about 100km northeast of Karachi. The total installed
capacity of this project is 49.5MW, and 33 Gold wind brand wind turbine generators (WTGs) with
a capacity of 1.5MW are installed. It is invested by Sachal Energy Development (private) Ltd., in
which Arif Habib Corporation Limited holds 100 percent shares. HydroChina International
Engineering Compony Limited. is the engineering procurement construction (EPC) contractor.
The Industrial and Commercial Bank of China (ICBC) provided a loan. The debt and equity ratio
is 85 percent:15 percent(Ibed).
Three Gorges second wind power project (2×50MW) is located at Jhimpir, Thatta district, Sindh
province, 90KM west from Karachi. This is a foreign direct investment (FDI) project, and is
invested, developed and constructed by Three Gorges Second Wind Farm Pakistan Limited (TGS)
and Three Gorges Third Wind Farm Pakistan Private Limited (TGT). The total investment amount
is $224 million on the basis of Build-Own-Operate (BOO), with a construction period of 18 months
and an operation period of 20 years. The total installation capacity is100MW,with an annual
electricity output of 286.6 GWH. It was listed as actively promoted project in the China-Pakistan
Economic Corridor in August, 2014(Kennedy, 2016).
United Energy Pakistan (UEP) 100MW wind farm is located in Jhimpir, Thatta district, Sindh,
110km from Karachi. The total installed capacity is 100MW with the supply of 66 sets of Wind
Turbine Generators (WTGs) of 1.5MW per set. It also includes construction of a 132KV substation
and a control center. This is a foreign direct investment (FDI) project. It is developed by UEP
Wind Power (Pvt.) Limited, a joint venture of Orient Group Investment Holdings Co., Ltd. (99%)
and United Energy Group Co., Ltd. (1%). China Gezhouba Group Company Limited (CGGC) is
the engineering, procurement, construction (EPC) contractor. The commercial contract of this
project was signed on September 11, 2015. China Development Bank provided financing of $252
million to the project, with the debt and equity ratio of 75 percent: 25 percent. The project became
operation in May 2017(Ibed).
Hydropower Projects:
Hydropower production under CPEC is the major component. Under CPEC 3.7 GW(3700MW) of
energy will be added on the national grid by 2023 due to these large hydropower projects, namely:
Karot, Kohala, Sukki Kinari and Neelum-Jhelum. Neelum-Jhelum is not directly part of the CPEC
because the project started its construction in 2008. But, the contractors and the sponsors of this
project are Chinese. It is an indirect CPEC project. In addition to this the massive Diamer Basha
Dam is still in the conception phase. According to Minister of Planning Development and Reform,
the financing of this project is being secured different International agencies; once that taped up,
the project is expected to be constructed by 2030-35. The Chinese big companies are working in
the hydro sectors, namely: China Three Gorgeous(CTG), China Ghezuba(CG), and Power
China(PC). Some of the projects that CTG is working on are 99MW wind farm in Jhimpir, 700MW
Karot and Kohala hydropower project. They are interested in developing the entire Indus cascade,
as well, for which a MoU has been signed between CTG and concern Pakistani departments. CG
is working on extension of Mangla and Tarbella Dam and Sukki Kinari under CPEC project. Like
CTG, CG wants to invest in other projects as well. However, their financial muscle is limited as
compared to CTG. For the Karot hydropower project, Silk Road Fund (SRF) has chipped in for the
investment part. The Fund was established in Beijing on December 29, 2014, with $40bn joint-
investment from the State Administration of Foreign Exchange, China Investment Corporation,
Export-Import Bank of China and China Development Bank(Irena. 2018).
Transmission And Distribution Lines:
On the transmission side, China State Grid has been nominated from the Chinese side for the
construction of the 660 KV transmission line from Matiari to Lahore and from Matiari to
Faisalabad. These projects will carry 2,000MW of energy produced each. The commutative project
cost is around 3 billion USD. These projects are Government to Government basis; therefore, the
execution of these projects is taking a long time. The expected Commercial Operation Date(COD)
is in 2018-19(Dawn, 2016).
Non-renewable Energy Projects Under China-Pakistan Economic Corridor(CPEC):
Coal Fired Power Plants increased under CPEC, the present government resorted to the cheapest
and quickest (in terms of construction and generation of electricity period) method of power
production. With the eventual goal of relying completely on indigenous resources of coal. The
current coal is dependent on imports from foreign countries. Ex VP of World Bank Mr. Shahid
Burki has been reported to have said, “with greater reliance on coal, Pakistan should be able to
reduce the cost of electricity for consumers” (Gass, P., Duan, H., & Gerasimchuk, 2016).
The cost of a coal power plant is much less compared to hydro/solar/wind/thermal or any other
form of energy. In the long term, the tariffs paid by the consumers are expected to directly reduce.
Since the share of coal power production in current energy mix of Pakistan is minimal. The costs
incurred by the consumers in Pakistan is one of the highest in Asia, at 0.13 USD per unit compared
to 0.12 USD in India, 0.11 USD in China and 0.09 USD in Bangladesh(Ibed).
Effectively, in the short-run as a result of CPEC and the inclination towards coal based power
plants has resulted in increase output of at least 3240MW by the end of 2018. This figure is more
than half of the peak demand- supply shortfall. Resultantly, the supply side policy adopted by the
energy specialist is expected to put an end to the acute load-shedding. So, coal fired power plants
playing a significant role in it(Rishap Vats, 2016).
In May 2017, Private Power and Infrastructure Board (PPIB) has awarded Letter of Interest (LOI)
for a 300MW imported coal based power project to China Communications Construction
Company (CCCC) is being established at Gwadar. Chief Representative of Chinese Overseas Port
Holding Company(COPHC), sister company of CCCC reviewed the progress of Gwadar and
CPEC in these words:
“Port Rehabilitation and Phase I of Gwadar Free Zone invested in COPHC is progressing quite
well. By November 2017, 5 new port Cranes will be functioning in Gwadar Port and the port
efficiently will be improved considerably. Construction of Phase I of Gwadar Free Zone will be
completed by the end of this year. This is a very remarkable progress of CPEC. Due to the fact
that there is no stable power supply in Gwadar, COPHC has invested for a capital power plants
(7 generators in parallel). This will be completed by the end of this year and our investor will have
non-stop power supply. Of course, this small power plant is only on temporary basis; the 300MW
power plant is expected to be in place soon- Land acquisition, financial arrangement and
implementation agreement are being finalized, as we speak. PPIB is offering assistance to them. I
hope everything will be ok. Our major concern right now, however, is “ security”. Unfortunately,
terrorist activities keep on occurring in places that are near to the site of the power plant. This
impedes the work being done and causes fear in the air. I hope Pakistani officials can solve this
issue efficiently and quickly.”
Other than COPHC which has recently stepped into the Bandwagon of coal power development
in Pakistan, Power China(PC) is one of the oldest players in the power sector. Under the umbrella
of CPEC it is working on the 1320MW Port Qasim imported coal fired project and Hydro China
Dawood 50MW Wind Farm in Gharu, Thatta. According to details, the energy production through
domestic coal is also expected to increase from 0.14 percent of total energy production in 2013 to
9.08 percent in 2022(Harris Azhar & Amna Syed,2017).
Thar Coal Power Plant is a coal-fired power plant in Tharparkar district, Sindh, Pakistan. Thar
coalfields, spread over an area of 9,600 sq km, have assessed reserves of 175bn tonnes of coal. It
is unfortunate that, so far, only 150MW power plant based on indigenous coal had been set up in
2003-04 in Pakistan, and that too in public sector( Liaquat Ali Jatoi, 2004).
The Sindh Engro Coal Mining Company (SECMC) has been leasing Block-II, spread over 95 sq
km and having about 2bn tonnes of reserves, since October 2009. The company has initiated work
on developing the mine through an open-cast method. It will extract 3.8m tonnes of coal annually,
which will be sufficient to fuel the proposed 660MW power plant. The 660MW mine-mouth
project is being established by Engro Powergen Ltd. Sindh Engro Coal Mining Company
(SECMC), Engro’s joint venture company with the Sindh government and other investors. In
December 2014, "Engro Thar Coal-fired Power Plant 660 megawatts" was listed among the
"Significant Energy Projects" totaling 10,400 megawatts agreed upon as part of the China-Pakistan
Economic Corridor(Rapoza & Kenneth, 19 February 2016).
The first phase of Thar Coal Fired Power Projects with the power production capacity of 660 MW
will start its commercial operation by June 3, 2019 instead of October 2019 (the earlier set target
for completion of the project). This is the first coal fired power project in Thar and it is one of the
leading energy projects of China Pakistan Economic Corridor (CPEC). The SECMC planed, by
December 2021 five more coal fired power plants would be set up in the block II of Thar and the
total production capacity of coal based electricity of Thar would be expanded to around 3000
MW(Daily Times, 2016).
The Sahiwal Coal Power Project is a coal power plant project located in the province of Punjab in
Pakistan. It has an installed capacity of 1320MW. It was financed under CPEC by total cost of
$1.8 billion by Industrial and Commercial Bank of China. It has been commenced full operations
on July 3, 2017(Abrar, Mian, 2017).
The power plant is Pakistan’s first supercritical coal power plant, and consist of 2X660MW plants
for a combined capacity of 1,320MW. This is the first phase, and may be followed by a possible
second phase which will include 2x1,000MW plants. Though the plant is now considered to be
part of the China Pakistan Economic Corridor(CPEC) which was announced in April 2015, the
symbolic ground breaking for the project actually preceded the announcement of CPEC and took
place in May 2014. As, the government of Punjab in March 2014 invited bids for the construction
of two 660MW power plants in order to help alleviate Pakistan’s energy shortfalls(Ahmed, Amin,
2016).

The plant was built by a joint consortium of china’s state-owned China Huaneng Group which will
own 51% of shares, and the Shandong Ruyi, which will hold 49%of shares. The Government of
Pakistan will purchase electricity from the consortium at a tariff of 8.3601 US Cents/kWh. The
project was built on a build, operate, transfer basis in which the plant’s ownership will be
transferred to the Government of Punjab after 30 years of operation(Ibed).
Most of the coal used for the power plant will be imported from Indonesia, with South Africa and
Australia identified as suitable supplemental suppliers. Indonesia is identified as a primary source
for its high quality coal, reliable production, and short transit times to Pakistan. The coal is being
transported by rail from the Port Karachi to Sahiwal, Punjab(The News, 2017).
An estimate 4.48 million tons of coal will be required annually for the plant, based on a calculation
of 22 hours of power generation per day. Indonesia is identified as a primary source for its high
quality coal production and shortest transit rout to Pakistan. Coal from Pakistan’s own Thar
coalfield was found to contain excessive amounts of sulfur and lime, and was not deemed to be of
high quality for the project. The supply of reliable coal from the fields was also considered to be
inadequate. A mixture of Pakistani indigenous coal with imported coal was also deemed to be
unsuitable as it would decrease heat production from coal, and would compromise safety of the
boilers which are to be used in the project(NEPRA, 2015).
Pakistan Port Qasim Power project is a coal power plant project located in port Qasim , Sindh
province. It has total installed capacity of 1,320MW. It is comprises of 2x660MW supercritical
coal power plant, one of which was inaugurated in December 2016 as part of the China–Pakistan
Economic Corridor. The $2.09 billion project is located on 204 acres at Port Qasim, 37 kilometers
east of Karachi in Sindh Province. The project is part of a group of 14 energy projects which fall
under the fast-tracked "Early Harvest" program of the $46 billion China Pakistan Economic
Corridor project(Zhong, Haixang, 2018).
Construction on these projects commenced in May 2015, and the first unit inaugurated in
December 2017. The plants were built on a "Build-Own-Operate" basis and will be operated by
the Port Qasim Energy Holding (PQEH), a firm jointly financed by Qatar's Al-Mirqab
Capital(QAMC) and China's Power Construction Corporation, a subsidiary of Sinohydro
Resources Limited. Al-Mirqab Capital will own a 49% stake in the project, and while Power
Construction Corporation, which will own a 51% stake in the project. The individual companies
will invest $521 million, while the Exim Bank of China will lend those companies the remaining
$1.56 billion required for construction. Electricity will be connected to the electric grid network K-
Electric via a 500 kilovolt AC transmission line. On November 2017, the first 660MW unit of the
power plant had been synchronized to the national grid(Ibed).
Most of the coal used for the power plant will be imported from Indonesia, with South
Africa and Australia identified as suitable supplemental suppliers. Indonesia is identified as a
primary source for its high quality coal, reliable production, and short transit times to Pakistan.
Coal from Pakistan's own Thar coalfield was found to contain excessive amounts of sulfur and
lime, and was not deemed to be of high enough quality for the project. The supply of reliable coal
from the fields was also considered to be inadequate. Mixture of Pakistani indigenous coal with
imported coal was also deemed to be unsuitable as it would decrease heat production from coal,
and would compromise safety of the boilers which are to be used in the project(The Nation, 2015).
Hub power station is a proposed 1,320-megawatt (MW) coal plant in Balochistan province,
Pakistan. In January 2015, the Hub Power Company announced that it plans to build a 1,320 MW
(2 x 660 MW) coal plant next to its current oil-fired power station, about 25 km southwest of the
town of Hub in Balochistan. In June 2015 the Private Power and Infrastructure Board approved
the 1320 MW power station. The plant would gradually be expanded to 3,960 MW (6 x 660 MW).
The project would run on imported coal, for which a coal jetty would be developed. According to
CEO Khalid Mansoor, Hubco had enough land near its 1,292 MW power plant to house six coal
plants of 660 MW each. Later that year Hubco signed a joint venture agreement with China Power
International Holding, a wholly-owned core enterprise of the China Power Investment
Corporation, to set up the plant as China Power Hub Generation Company(Hussain & Dilawar, 2016).
In February 2016 the National Electric Power Regulatory Authority (Nepra) granted the upfront
tariff of Rs4.7153/kilowatt hour to China Power Hub Generation Company for the proposed 1320
MW plant. The Nepra estimated the project cost for 660MW at US$956.1 million. Hubco is
targeting financial close of the new plant before June 2016, with the project likely to come online
by 2020. Hubco officials visited Ministry of Water & Power officials in Islamabad for a
cheerleading session for the project in March 2016. In April 2016, the Private Power and
Infrastructure Board issued a letter of support to China Power Hub Generation Company for
construction of the station (it is unclear how this differs from the June 2015 approval). The
statement issued along with the letter of support stated that the project is now scheduled to come
online by 2019(Minhas Majeed Khan et al, 2017).
In October 2016 Hub Power Company said it may reduce the plant to 1 x 660 MW to expedite
construction. According to Dawn, the reduction is actually because the Private Power and
Infrastructure Board (PPIB) a one-window arrangement for private investments in the power sector
decided in June 2016 "to stop processing of power generation based on imported fuels because of
substantial capacity already contracted that was enough to meet power demand until 2022 and to
remain watchful of considerable foreign exchange erosion." However, companies that had met
financial close before that date and/or were part of the China-Pakistan Economic Corridor (CPEC)
projects were exempted from the restriction, allowing for Hubco to build both 660 MW units.
Hubco expects to arrange financing for the US$1.8 billion power project by June 2017. The two
units was planned for operation in 2018-2019. Ground was broken on both 660-MW units in March
2017. The plant is slated to cost US$2 billion and unit-1 is synchronized on January 1, 2019(Ibed).
Gwadar Coal Power Station:
Gwadar power station is a proposed 300-megawatt (MW) coal plant in Balochistan province,
Pakistan. This project was proposed by PML-N government in 2014, but, the Gwadar project does
not appear in the list published in April 2015 of the 51 MoU's signed under the agreement.
However, in June 2016 the federal government allocated Rs 20 million ($200,000) for a pre-
feasibility study of the Gwadar coal plant(Zofeen T Ebrahim, 16.06.2017).
The CPEC Joint Cooperation Committee (JCC) had decided in its sixth meeting, held in Beijing
in December 2016, that a 300MW imported coal-fired power project must be developed on a
fast track in Gwadar. In the seventh JCC meeting held on November 21, 2017, it was decided
that the project would be undertaken by CCCC Industrial Investment Holding Company Limited
(CIHC). The sponsors incorporated CIHC Pak Power Company Limited (CPPCL) as the special
purpose company to develop the project. The total cost for the project is approximated $492.94
million, which is expected to be financed in a debt to equity ratio of 75:25. The CCCC is the main
sponsor of the project and will hold 75.5 percent equity in the project, while the remaining 24.5
percent equity will be invested by Tianjin Energy Investment Group Company Limited(The
Express Tribune, 2018).
The project is proposed to have two units of 150MW consisting of two super high -pressure
boilers, two steam turbines and two generators. The boilers will be sub-critical and will be
ignited with the help of pulverized coal imported from South Africa or other sources through
Gwadar Port. From the port, the coal will be sent via trucks to coal yards inside the complex. A
November 29, 2018 updated list of "Upcoming IPPs" by the Ministry of Water & Power states the
plant will be commissioned in March 2022(Mian Abrar, 6 December 2018).
Pakistan Atomic Energy Commission(PAEC)
Pakistan Atomic Energy Commission(PAEC) established first nuclear power plant with total
capacity of 100MWe in 1971, at Paradise point in Sindh, which is known as Karachi Nuclear
Power Plant I(KNUPP I). The second nuclear power plant was Chashma I(CHASHNUPP I) in
Punjab province, having total capacity of 325MWe. It was designed by Chinese company in
May 2000. Construction of its twin, Chashma II(CHASHNUPP II) started in December 2005,
with cooperation of China. A safeguard agreement with the IAEA was signed in 2006, and grid
connection was I March 2011, with the commercial operation in May. Upgrades have added 5
MWe since (to 330MWe gross), but these are not considered parts of CPEC(Syed Yousaf,
Raza,July 2012). .

Moreover, PAEC and Chinese companies singed a contract in 2010, to construct 3&4 units at
Chashma venue Punjab province. The Chinese company started work on unit-3 in May 2011
and on unit-4 in December 2011. Later on, these projects were incorporated under CPEC energy
projects. China Zhongyuan Engineering Co. Ltd (CZEC) said “completion of unit 3 would be
in 2016”, and in fact it was grid-connected in October, whereas, unit 4 started up in March
2017, and was grid-connected late in June 2017. Chasnupp-3 and Chashnupp-4 are designed to
generate 340MW of energy each(Shahbaz Rana, 2018)
The PAEC also singed contracts at the end of August 2013, with the Chinese companies, to
build two units of the Karachi Costal power project with net generation capacity of 2117MWe.
The PAEC said that 82% of the total cost would be financed by china. Construction of the first
unit started in August 2015, while , construction of the second unit was started in May 2016.
The two power plants cost $9 billion and are being completed under the China-Pakistan Economic
Corridor (CPEC) projects. The two power plants are expected to be functional and start the
production of electricity by the end of 2018(Ibed).
The inauguration of Chashma Nuclear Power Plant Unit-4 another milestone achieved by the
Pakistan Atomic Energy Commission in the collaboration with China. This will add 340MWe to
the grid station. China is assisting Pakistan in carrying out energy projects along with other
economic ventures. CPEC is the biggest of all joint economic projects. Pakistan is utilizing its
nuclear technology for peace purposes and for the welfare of the people of Pakistan. However, the
units 3 and 4 are planned to enter commercial operation in 2021 and 2022, respectively. During
the inaugurating of the Chashma 4 unit, the prime minister said,” the government is committed to
achieve its goal of adding 8,800MWe of nuclear energy to the national grid by 2030”, a total of
2,322MWe being now under construction(Zafar Bhutta, 2018).
Chashma 5 nuclear reactor project is also under CPEC project. China National Nuclear (CNNC)
has signed a cooperation agreement with the Pakistan Atomic Energy Commission (PAEC) for the
construction of Chashma nuclear power plant’s Unit-5. Under the deal, CNNC will employ its
HPR 1000 technology to build a one million kilowatt class unit at the nuclear power plant (NPP).
CNNC China Zhongyuan Engineering will construct the unit, which will be the third to feature
HPR 1000 technology in Pakistan. However, this project is under contest right now(Mrinmoyee
Hazarika, 2017).
Liquefied Natural Gas Power Plant (LNG):
Liquefied natural gas power LNG projects are also considered vital to CPEC. The Chinese
government has announced its intention to build a $2.5 billion 711 kilometre gas pipeline from
Gwadar to Nawabshah in province as part of CPEC. The pipeline is designed to be a part of the
2,775 kilometre long Iran–Pakistan gas pipeline, with the 80 kilometre portion between Gwadar
and the Iranian border to be connected when sanctions against Tehran are eased; Iran has already
completed a 900 kilometre long portion of the pipeline on its side of the border. The Pakistani
portion of the pipeline is to be constructed by the state-owned China Petroleum Pipeline Bureau. It
will be 42 inches in diameter, and have the capacity to transport 1 billion cubic feet of liquified
natural gas every day, with an additional 500 million cubic feet of additional capacity when the
planned off-shore LNG terminal is also completed. The project will not only provide gas exporters
with access to the Pakistani market, but will also allow China to secure a route for its own
imports(Bhutta, Zafar, 2016).
The project should not be confused with the $2 billion 1,100 kilometre North-South
Pipeline liquified natural gas pipeline which is to be constructed with Russian assistance between
Karachi and Lahore with anticipated or expected hopefully completion by 2018. Nor should it be
confused with the planned $7.5 billion TAPI Pipeline which is a planned project involving
Turkmenistan, Afghanistan, Pakistan, and India(Ibed).
Other LNG projects are currently under construction with Chinese assistance and financing that
will augment the scope of CPEC, but are neither funded by nor officially considered a part of
CPEC. The 1,223MW Balloki Power Plant is currently under construction near Kasur, and is being
constructed by China's Harbin Electric Company with financing from the China's EXIM bank, is
one such example. In October 2015, Prime Minister Nawaz Sharif also inaugurated construction
of the 1,180MW Bhikhi Power Plant near Sheikhupura, which is to be jointly constructed by
China's Harbin Electric Company and General Electric from the United States. It is expected to be
Pakistan's most efficient power plant, and will provide enough power for an estimated 6 million
homes. The facility became operational in May 2018(Rakisits, Claude, 2018).
Impact Of CPEC On The Energy Sector Of Pakistan:
Five years back, there was severe load shedding in Pakistan and foreign investors were reluctant
in investing in the infrastructure sector especially in the power sector of Pakistan. Despite having
vast energy resources especially coal reserves and water yet Pakistan couldn’t utilize these
indigenous resources due to lack of policy framework and lack of funds(Yusuf, 2017).
Pakistan used to be an energy-thirsty country that sometimes-experienced blackouts. However, the
situation has largely improved due to the construction of the China-Pakistan Economic Corridor
(CPEC). Widely considered a game changer for Pakistan, CPEC indeed has been playing a
backbone role in the country’s development. In the initial three years of its implementation, CPEC
has completed seven projects of energy with capacity of 3240 MW. These projects accounted for
11 percent of total electricity generation in Pakistan. These have solved Pakistan’s headache of
blackouts, while facilitating the country’s economic development by providing sufficient
electricity to its industries(Ibed).
In 2013 there was only one wind power plant with capacity of 50MW in Jimpir, Sindh. However,
the China Pakistan Economic Corridor (CPEC) has brought revolution in this part and contributed
300MW of clean wind energy to the national grid through its four early harvest wind power
projects. The four wind projects that have been completed under CPEC and are connected with the
national grid include Dawood wind power project (50 MW), Sachal Energy wind farm (50MW),
three gorges second wind farm project (100MW), and UEP wind farm project (100MW). Under
CPEC the target is set to increase the share of wind energy to 5% in the total energy mix by
2030(Salman Siddiqui,2017).
Interestingly, the impact of CPEC on solar power sector in Pakistan is very great. The Chinese
companies constructing Qauid-e-azam solar park(QSP) in Bahawalpur, Punjab. The initial project
plan included 1000 MW , as first phase of project 100 MW was installed by government of Punjab
at a cost of $131milion . This is known as the largest solar system in the world, which is covering
500 acres. While, remaining are under construction. Under CPEC the target is set to increase the
share of solar energy to 5% in the total energy mix by 2030(Malik, 2018).
Pakistan’s energy production in 2013 was heavily dependent on Gas and RFO. Total electricity
production around 57 percent was based on Gas and RFO which would be significantly reduced
to 25 percent in 2022 after completion of all priority energy projects under CPEC. By optimizing
the energy structure, Pakistan’s energy supply will be more stable and safe and the significant
reduction of Gas, RFO imports would help the country saving foreign exchange reserves(Hussain
et al, 2017).
Allah has blessed Pakistan with immense coal resources more than 185.5 billion tones which
exceeds equivalent oil reserves of Saudi Arabia and Iran. Despite such blessed reserve Pakistan
had only one coal power project in Thar, Sindh before launching CPEC. However, it was difficult
for Pakistan to invest mound amount of dollars in this sector. So, CPEC start work and investing
more than 6.5 billion dollars in this sector. The Chinese foreign direct investors are working on
more than 4 coal power projects. Under CPEC, coal power plants will add more than 7260MW of
electricity on grid station by 2022. Under CPEC the energy production through domestic coal is
being made predictable to increase from 0.14 percent of total energy production in 2013 to 9.08
percent in 2022(Tiezzi, 2016).
Pakistan took long time, from 1971 till 2011, to add 430MW nuclear energy to grid station.
However, after signing of CPEC project by China and Pakistan in 2015, the CPEC project is being
started work on 2457MW of nuclear energy projects. Though, to add this amount of energy by
very short span of time, by 2022. This is likely to be a very great revolution brought by CPEC in
this 6-7 short years of time. It is expected, that “CPEC will add 8,800MWe of nuclear energy to
the national grid by 2030”(Ibed).
In the context of hydel power projects, CPEC also greatly impacting upon hydel power projects.
CPEC, in hydel segment investing a lot. Some new hydropower projects under CPEC including:
Karot ( 720MW ) in Punjab, Kohala(1124MW) in AJK, and Sukki kinari(870MW) in Mansehra,
kpk, are under constructing whereas, some are under extension like Mangla and Tarbella Dam etc.
Under CPEC, hydel power will add extra 3700MW of electricity on grid station by 2023. Before
CPEC, hydel power’s total share was 7115MW of electricity while, it will boost the total capacity
to 10815MW by 2023.Recently, the OBOR Summit in China held in the mid of May 2017 brought
further hopes for Pakistan especially in the energy sector along with other significant
infrastructural areas. Pakistan and China sealed agreements on a number of energy projects under
the ambit of CPEC(Kamran, 2018).
Conclusion:
To sum up, from the aforementioned studies it is appeared that, China-Pakistan Economic Corridor
(CPEC) is shaping up to be one of the biggest foreign investments in Pakistan in the next five years. The
economic corridor has immense potential for Pakistan’s energy to benefit from. It is a mega project of
total cost more than $46billion spearheaded by China. This project is roughly divided into three
categories which are the transportation networks, energy projects, and creation of trade zones. As
far as the energy sector is concerned, a US$34 billion investment allotted for the power sector out
of the total US$46 billion supposedly pledged by the Chinese government. CPEC aims to generate
more than 16,400MW of power and solve the electricity shortage in Pakistan. The construction is
being started under CPEC on all energy projects including: Wind(300MW), Solar(1000MW),
Nuclear Energy(2457MW), Coal(7260MW), and hydel(10815MW) etc. In the initial three years
of CPEC project, 7 projects of energy with capacity of 3240MW has completed. These projects
have solved Pakistan’s headache of blackouts. Also, it facilitating the country’s economic
development by providing sufficient electricity to its industries. It is expected that, Pakistan will
get sustainable energy development by 2030.