ISLAMABAD: China has agreed to the conversion of three major coal-fired power plants in Pakistan from imported to local coal, marking a significant development in the country’s energy sector, local media reported.
The agreement was reached during the recent visit of Pakistan’s Finance Minister Muhammad Aurangzeb and Energy Minister Owais Leghari to China, which is expected to address some of Pakistan’s ongoing electricity challenges, local media reported citing sources.
The three power plants in question are the 1320-megawatt Sahiwal Coal Power Plant, Hub Power Plant, and Port Qasim Power Plant. Currently, these plants rely on imported coal, which has made electricity production both expensive and unsustainable for Pakistan’s energy grid.
The shift to using local coal aims to reduce the high costs associated with importing coal, which has been a substantial burden on the nation’s energy budget. By utilizing domestic resources, Pakistan expects a reduction in production costs, making electricity more affordable and improving the overall efficiency of the power sector.
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During the visit, the Pakistani delegation received a positive response from Chinese authorities regarding the re-profiling of these power plants, local media reported. A procedural framework has been established to guide the conversion process, ensuring a smooth transition from imported to local coal. The framework will cover the technical and logistical aspects of the conversion, including modifications needed to accommodate local coal specifications.
Meanwhile, China has expressed its commitment to supporting Pakistan through Panda Bonds, which are Chinese bonds issued in foreign currencies by non-Chinese entities. This financial backing will assist in facilitating the transition and addressing any associated challenges.
This development is timely, as Pakistan grapples with a severe electricity crisis exacerbated by high-capacity payments to Independent Power Producers (IPPs). The conversion of these plants is expected to alleviate some of the financial pressures and contribute to a more stable energy supply.
Ongoing meetings between Pakistani and Chinese officials will continue to focus on the specifics of the conversion process, including the technical modifications required and the integration of local coal supplies.
