ISLAMABAD-The Chinese company CIHC Pak Power Company Limited (CPPCL) working on 300MW Gwadar coal fired power project has termed the proposal for import of electricity from Iran to Gwadar and the proposed 600km 500KV transmission line from Hub to Gwadar as unreliable, susceptible to blackout due to technical or security concerns, which does not give investors the confidence to invest in the port city.
The CIHC Pak Power Company Limited (CPPCL) has also termed the proposal of the PPIB regarding converting to local Thar coal instead of imported coal and relocation of power plant from Gwadar to Thar not feasible, official source told The Nation.
The company concern was conveyed in a progress review meeting on 300MW coal fired power project held here on Wednesday. The meeting was chaired by Federal Minister for Planning, Development & Special Initiatives, Professor Ahsan Iqbal and was attended by the chairman COPHCL, chairman Gwadar Port Authority (GPA) and other relevant stakeholders. The meeting was informed that construction of the project will commence during 3rd quarter of 2023. The total installed capacity of the project is 300MW which will be completed at the estimated cost of $461 million. The construction period of the project is 30 months and the operational life of the project is 30 years.
During the meeting, the federal planning minister asked China Overseas Ports Holding Company Ltd (COPHCL) to provide exact demand of the electricity for Gwadar Free Zone and share 10-year plan for electricity consumption by Gwadar Free Zone Company in order to establish exact electricity utilization of 300MW coal fired power project at Gwadar, said a press statement issued here. 300MW coal fired power project was conceived under the China Pakistan Economic Corridor (CEPC) in 2016 that would cater to the needs of some 150,000 local people by the end of 2023. “The government is committed to provide electricity for the Gwadar Free zone; however, COPHECL should tell the exact demand of the electivity in order to avoid any capacity issues in the future, said the planning minister, while chairing the meeting. The minister further said that the government is already working on a project of two transmission lines from Iran that will increase the demand of the electricity. If the demands are less then it will have a negative impact as the country is already facing an energy crisis therefore, the exact requirement of electricity is essential to pursue the project, said the minister, while insisting the Chinese company should share the long term electricity consumption plan for Gwadar Free Zone.
The meeting was informed the CIHC has discussed financing and insurance matters with Sinosure and China Development Bank and has achieved major breakthroughs in this regard. This envisages 70pc SINOSURE commercial insurance, 25pc exposure risk guarantee by shareholders, and 5pc exposure risk by China Development Bank. However, further progress is conditional primarily upon extension in Letter of Support (LoS) and change in required commercial operations date (COD). The company has termed the proposal of the PPIB regarding converting to local Thar coal instead of imported coal impossible since there are issues of availability of coal from existing mines for the 300 MW project. It is impractical to transport coal over a distance of 1,000 km from Thar to Gwadar, transport coal using diesel as a fuel negates purpose of saving foreign exchange and reducing cost of generation. Similarly the relocation of power plant from Gwadar to Thar has also been termed unfeasible. Project is being developed given the strategic objectives in Gwadar. Multilaterals no longer finance coal projects and local banks do not have the foreign exchange to fund such projects, the company said.
The proposal for the construction of a 600 km 500 KV transmission line from Hub to Gwadar is in the very preliminary stage and may have financing issues. The availability of power under this option will always remain susceptible to blackout due to technical or security concerns. Investors in Gwadar and Balochistan already have serious security concerns about investing in Gwadar. Making their businesses prone to such risks will not provide the required comfort to invest. It is impossible to convince or guarantee to potential investors that such a line will operate uninterruptedly as it is vulnerable to terrorist attacks due to its long length of 600km. An issue with even a small length of this line will lead to a total disruption of power at Gwadar. On the proposed import of Iranian electricity, the company said that the option of import of electricity from Iran to Gwadar has been unreliable in the past and does not give investors the confidence to invest in Gwadar. Power has only been available on an available basis with no commitment. Reliance on power from a third country for a strategic location such as Gwadar is not advisable.