ISLAMABAD - Experts at a webinar stressed the need for exploring innovative financing mechanisms in the context of Pakistan’s energy sector to facilitate the early retirement of coal power plants under China-Pakistan Economic Corridor (CPEC).
The webinar titled ‘Scoping the Feasibility of Early Retirement of Coal Power Plants under CPEC’ was organised by the Sustainable Development Policy Institute (SDPI) here.
Speaking on the occasion, Mustafa Hyder Sayed, the Executive Director of Pakistan-China Institute, stressed the need for political consensus to create conducive environment to boost investments in energy sector. He underscored the need to move beyond theory and make a bankable case for retiring the coal power plants in Pakistan, which is acceptable to investors and is financially sustainable. Explaining the delay in Gwadar power plant, he noted challenges with Sinosure, a Chinese insurance company, indicating that support for new power plants is contingent on settling debts from previous projects. Amid the pressing climate urgency, the challenge lies in urging the retirement of coal power plants, he said.
Shuang Liu, the Senior Associate and China Finance Lead at the World Resources Institute (WRI), emphasised the importance of gaining a clear understanding of investor motivations and the constraints that exist in the early retirement of these plants. She highlighted the need to revisit and renegotiate terms, particularly with the major financial institutions such as the China Development Bank and EXIM Bank.
Haneea Saad, Energy Finance Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said that immediate retirement for the selected coal fleet had economic valuation of $1.1 billion-1.6 billion and delays in retirement will significantly reduce these values to a range of $398 million to $628 million, highlighting the economic implications.
Julia Skorupska, Head of Secretariat, Powering Past Coal Alliance (PPCA) urged governments and power companies to create credible transition plans, increase public finance for coal retirement, provide regulatory clarity, and actively generate pipeline projects. She called for including social cost of emissions from coal power plants in estimation processes.
Dr Daniele Malerba, Senior Researcher at the German Institute of Development and Sustainability (IDOS), stressed the need to consider the social and local consequences of such transition. He emphasized the need to leverage the JETPS framework, pointing out that success depends on involving Chinese stakeholders.
Christoph Nedopil Wang, Director of Griffith Asia Institute, cited Egypt as a successful model in executing a debt-for-climate swap, showcasing the potential for innovative financial arrangements to address climate-related challenges, which can resolve the financial challenges faced by Pakistan.