KARACHI: Pakistan is set to attract more Chinese investment for setting up another Thar coal-fired power plant as the country seeks to aggressively utilise indigenous energy resources to reduce its reliance on imported fuels.
“Arif Habib Corporation Limited is going to set up a 330-megawatt (MW) Thar coal-fired power plant,” Arif Habib, Chairman of the diversified business house, said during a visit to the Karachi Press Club on Tuesday.
The project would be located in the Thar block-II and attract Chinese financing, he said.
The Chinese government is investing billions of dollars in Pakistan’s ports, roads, railway infrastructure and power projects. The investment includes over $60 billion earmarked for the China-Pakistan Economic Corridor (CPEC) apart from the significant amount reserved for non-CPEC projects.
Habib said his company would soon submit an application with the National Electric Power Regulatory Authority (Nepra) for setting a power tariff.
“In the next six months, the process of arranging finances (equity and debt) will be initiated,” he informed reporters, adding “the financing will take around a year.” The plant will start production in 2020-21.
Recently, the power sector regulator revised downwards the tariffs for Thar coal-based power projects, setting them in the range of Rs7.58-7.79 per kilowatt-hour (kWh). These are up to 18.5% lower than the previous tariff range of Rs8.33-9.56 per kWh, which expired in January 2017.
The government had so far approved four Thar coal-fired power projects with total capacity of 2,640MW, a Nepra document revealed.
First of these is the 330MW Engro PowerGen Thar, which is scheduled to kick-start production by June 2019. Engro will add one more unit of the same capacity later.
ThalNova Power Thar and Thar Energy Limited will also launch single units of 330MW each. Apart from these, the Thar Coal Block-I Power Generation Co is set to launch two units of 660MW each.
Lucky and Siddiqsons are also constructing power projects based on Thar coal, but at a distance from the coalmines. Thar coal-mining and power projects are financed by the Chinese government and private investors.
Habib, who is a seasoned stock broker and a former president/chairman of the Pakistan Stock Exchange, said political uncertainty was one of the elements that caused the downturn in the stock market.
“The recent political developments (a rally announced by cleric Tahirul Qadri) may briefly keep the stock market under pressure. In the long run, stock fundamentals will drive the market,” he said.
He predicted that the recovery phase in the market, which began with the stepping down of Nawaz Sharif from the premiership, would continue. “The pace of recovery, however, may not be as fast as it was before the political impasse when the PSX was reclassified as an emerging market by the MSCI.”
Habib said Pakistan would trigger the second round of investments in different sectors of the economy once CPEC-related infrastructure and power projects were completed.
In the first round, industrial sectors producing construction material (like cement and steel) have expanded production to meet the increased demand from CPEC projects.
The completion of CPEC-led power projects worth over $34 billion will lead to the supply of much-needed electricity for economic growth.
“The enhanced power availability will convince other sectors of the economy to make fresh investments for expansion,” he said. He said Pakistan needed $100-120 billion in investment for infrastructure projects, which had been obtained through CPEC. China was providing the financing at a low mark-up in the range of 1.25-4.5%, he said.