No more energy projects based on imported coal
Friday, September 14th, 2018
Pakistan has decided to abandon future energy projects based on imported coal, exploring mode of financing for major infrastructure projects like $09 billion Mainline (ML-1) for up-gradation of railway on Built-Operate and Transfer (BOT) basis instead of getting loans and allowing third party countries for participating into Gwadar development and special economic zones under much trumpeted China Pakistan Economic Corridor (CPEC).
The decision of abandoning imported coal projects will result into stopping some projects being planned at imported coal, including Rahim Yar Khan; however, the government also decided to continue Thar Coal projects which are going to utilise domestic resources of coal.
However, the Gwadar Coal Project which is planned at imported coal may continue because of its strategic importance and entering into advance stage of planning and execution. The last PML-N led government had also put Rahim Yar Khan coal power project onto list of long term projects, but, now, the PTI led regime finally decided to exclude it from the list of CPEC projects.
“We have decided to establish new Joint Working Group (JWG) for social economic development where projects related to education, health, vocational training and capacity building will be firmed up. We also decided to conduct study for exploring new mode of financing in order to undertake future projects on BOT basis instead of Engineering Procurement Contract (EPC) by securing loans,” Federal Minister for Planning Makhdum Khusro Bakhtyar said in his maiden press briefing after chairing 56th progress review meeting on CPEC projects here on Thursday. Chinese Ambassador in Pakistan and representatives of different federal ministries and provinces also attended the review meeting.
The minister, who himself remained part of treasury benches in last five years, lambasted the last PML-N led government for construction of motorways and roads with cost of $6 billion and orange line project at $2.5 billion but put ML-1 project with estimated cost of $9 billion into backburner.
He said that the government decided to abandon future energy projects based on imported coal but the ongoing projects like Sahiwal and Port Qasim would continue to function and would remain operationalised. The energy mix, he said, would be changed as the last PML- N led government had focused only on power generation but ignored transmission and distribution that resulted into piling up of monster of circular debt. The government did not focus on transmission and distribution system of power sector causing surfacing of circular debt which was also linked with establishment of revolving fund under CPEC projects.
To a query regarding possibility of re-negotiation with China to prolong repayment period under CPEC, the minister said that China executed $6 billion infrastructure projects through loans out of total outstanding foreign loan touching in the range of $95 billion and the government would meet all financial obligations.
Now the government, he said, wants to explore new mode of financing for construction of viable projects on BOT basis instead of securing loans and EPC mode, the minister added.
The minister was astonished on negative narrative started appearing in international and local media soon after visit of China’s Foreign Minister to Pakistan. He said that the government took important decisions related to CPEC, including the ongoing projects of energy and infrastructure would be completed under early harvest programme. The industrial cooperation, he said, would be boosted because manufacturing base had shrunk in the country. He said that the last government wasted five years whereby it could not focus on development of Gwadar and ML-1.
The government, he said, would open up for investments in Gwadar by third party countries. He said that Pakistan was infrastructure deficient and required $200 billion for meeting financing requirements. He said that it would be viable to hire consultant by spending $3 million to $4 million for devising best design and execution plan for projects like ML-1 with estimated cost of $9 billion. He said that the catch-up mode compromised bargaining position so now studies would be done before visiting China in November or December this year.https://www.thenews.com.pk/print/368159-no-more-energy-projects-based-on-imported-coal