China Sees Opportunity Where Others See Risk
China has agreed to build several power plants in Pakistan to help the South Asian nation deal with its worsening electricity crisis. When completed over the next several years, these plants, including Nandipur (425 MW, Thermal), Guddu(800 MW, Thermal) and Neelam-Jhelum(1000 MW, Hydro), Chashma (1200 MW, Nuclear) will add more than 3000 MW of power generating capacity for the energy-hungry country. Pakistan is currently facing a deficit of 4,000 to 5,000 megawatts, resulting in extensive load-shedding (rolling blackouts) of several hours a day.
China has already installed a 325-megawatt nuclear power plant (C1) at Chashma and is currently working on another (C2) of the same capacity that is expected to be online by 2010. The agreements for C3 and C4 have also been signed. The United States has objected to China supplying C3 and C4 on the grounds that any Pak-China nuclear cooperation would require consensus approval by the NSG, of which China is now a member, for any exception to the guidelines. The US is applying double standards since it supported and got approval for such an exception from NSG for its own nuclear deal with India.
Under another agreement, China has agreed to invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tons of coal per year, which is sufficient to fuel the proposed 405 MW power plant. Pakistan is currently world's seventh largest coal-producing country, with coal reserves of more than 185 billion tons (second in the world after U.S.A.'s 247 billion tons). Almost all (99 percent) of Pakistan's coal reserves are found in the province of Sindh. Pakistan's largest coal field is Thar coal field which is spread over an area of 9100 square kilometers, and contains 175 billion tons of coal. So far this coal field has not been developed but efforts are underway.
The Export-Import Bank of China will lead the multi-national bank financing and China Export and Credit Insurance Corporation (Sinosure) will provide political risk and credit default insurance for the first 425 MW project at Nanipur, Gujranwala estimated to cost $329m, according to Associated Press of Pakistan. Other participating banks include BNP-Paribas, HSBC Bank plc, and CIC France. The lead contractor is China's Dongfang Electric Corporation Limited, with G.E. France as a sub-contractor.
Political risk has been rising in many developing nations, including the South Asian nations of Bangladesh, India, Pakistan and Sri Lanka (see 2008 political risk map). The cost of insurance against political and economic risk has also been going up, as the global economic crisis unfolds. Hong Kong-based Political & Economic Risk Consultancy Ltd. has recently rated India as the riskiest of 14 Asian countries, not including Pakistan and Afghanistan, it analyzed for 2009.
With their national coffers bulging and their exports driven economy slowing, the Chinese see opportunity in the developing world where others see political and economic risks. It is an opportunity for China to assure the continuing availability of raw materials and oil for its growing industries and to diversify its export markets. In addition to helping bail out the ailing US economy, China is using some of its vast cash reserves of $2 trillion to offer supplier financing as well as insurance for the non-Chinese partners to cover political and credit risk in the emerging markets. With bilateral trade volume of about $7 billion, Pakistan is only one example of Chinese interest. Others include politically-risky Afghanistan, and many nations of Sub-Saharan Africa where the Chinese are financing and building major infrastructure projects. In Afghanistan, China has committed nearly $2.9 billion to develop the Aynak copper field, including the infrastructure that must be built with it such as a power station to run the operation and a railroad to haul the tons of copper it hopes to extract. The Aynak project is the biggest foreign investment in Afghanistan to date, according to Reuters. The trade between Africa and China has grown an average of 30% in the past decade, topping $106 billion last year.
Looking at how the Chinese are working with many developing nations in Asia and Africa, it appears to be an unwritten Chinese policy to offer trade and investment in projects rather than direct cash aid. Given the rampant government corruption in many developing nations, including Pakistan, the Chinese policy is a sound one. It attempts to benefit the people and the nation more than the corrupt politicians and government officials who they must deal with.
In terms of Chinese dominance in power infrastructure development, one only needs to look at the heavy Chinese presence in the Indian power sector development. According to the Wall Street Journal, Chinese companies are now supplying equipment for about 25% of the new power capacity India is adding to its grid, up from almost nothing a few years ago. They have sent thousands of skilled workers to Indian plant sites, some of which boast Chinese chefs, Chinese television and ping pong.
Clearly, the Chinese objectives are not entirely altruistic. Their strategy is driven by enlightened self-interest in the developing world, which they see as source of commodities that their industries need as well as growing export market for their products and services. But the Chinese want to do good and do well at the same time by helping to lift people out of poverty in the developing world. By doing so, they want to be seen as friends and partners by the people in Asia, Africa and Latin America. The strategy enhances China's status as the new superpower that takes its global leadership role seriously.
Chinese Do Good and Do well in Developing World
World's Largest Solar Deals
Pakistan Inks Neelum-Jhelum Deal
Political Risk Insurance
Political and Economic Risk Consultancy
Pakistan's Electricity Crisis
Forget Chinindia! It's Chimerica to the Rescue!
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The Future Mantra
China has offered Pakistani companies tax free status if they operate in the border province of Xinjiang while ICBC, the Chinese bank, is working on ways to finance the Iran-Pakistan oil pipeline project.
In Islamabad, Dai appealed to world powers to support Pakistan and not desert it at this time. Pakistan has considerable influence on Afghanistan, which must be taken into consideration by those trying to resolve the crisis in Kabul, he suggested after meeting Pakistani president Asif Ali Zardari and prime minister Yousuf Raza Gilani.
The taxation move suggests China is serious about building a rail line connecting Pakistan and is preparing the economic infrastructure to support it. The new rule unveiled on Saturday offers a 5-year tax exemption to companies operating in Kashgar, which borders Pakistan and Horgos on the Chinese border with Kazakhstan.
Beijing had earlier announced to build a logistics centre in Kashgar, which saw bloody ethnic riots earlier this year, to revive the local economy and divert attention of the minority Muslim community from separatist leaders fighting to build an independent East Turkmenistan nation.
Pakistan recently announced that the Industrial and Commercial Bank of China, the largest of Chinese banks, has been appointed as the main financier in a consortium that will finance the $1.2 billion Iran-Pakistan gas pipeline. Beijing's hand is clearly visible in the decision because the project is based on the assumption of a politically stable Pakistan, which is not the case at present.
China, which has already invested $200 million to build the Gadwar port in Pakistan and helped the country build two nuclear power projects, is betting on the ability of the Zardari government to ensure stability by mending fences with the country's military leadership.
Pakistan and China on Friday signed six bilateral agreements including a Currency Swap Agreement to further bolster their existing trade and economic co-operation.
The agreements worth over US $700 million were signed between the two sides at a ceremony held here at the PM House and was also witnessed by Prime Minister Syed Yusuf Raza Gilani and State Councillor of China Dai Bingguo.
The Supplementary Agreement on Extension of Five Year Development Programme on Trade and Economic Co-operation between the two countries was signed by Secretary Economic Affairs Division, Wajid Rana and Vice Minister of the Chinese Ministry of Commerce, Li Jinzao on behalf of their respective governments.
The Inter-Governmental Framework Agreement on Additional Financing for Improvement of KKH ($90 million) between the two countries was also signed by Wajid Rana and Li Jinzao.
The Currency Swap Agreement was signed by Governor State Bank of Pakistan, Yaseen Anwar and Vice Governor of the People's Bank of China, Du Jinfu.
The Concessional Loan Agreement on Additional Financing for Improvement of KKH ($90 million) between the Economic Affairs Division (EAD) and the Export-Import Bank (EXIM Bank) of China was signed by Secretary EAD, Wajid Rana and the Vice Governor of EXIM Bank, Sun Ping.
The Loan Agreement on Provision of $259 million Preferential Buyer's Credit for KKH (Karakorum Highway) Realignment at Attabad between EAD and the EXIM Bank of China was also signed by Wajid Rana and Sun Ping.
The Loan Agreement on Export Credit Facility of $464 million for Power Plant between Guddu Power Company and EXIM Bank of China was signed by CEO Central Power Generation Company Limited (GENCO- II), Aslam Sheikh and the Vice Governor of China's EXIM Bank, Sun Ping.
Experts are of the opinion that modest progress had been made in Seoul and many of the tough issues to fully solve the problem were addressed because the participants were unwilling to make binding and transparent agreements. “The current nuclear material security regime is a patchwork of unaccountable voluntary arrangements that are inconsistent across borders…….Consistent standards, transparency to promote international confidence, and national accountability are additions to the regime that are urgently needed,” said Luongo.
The communiqué also omitted a reference to the need for “concrete steps” towards a world without nuclear weapons, a phrase which had been included in an earlier draft statement. A Seoul government official told the media (on condition of anonymity) that some nations had been uncomfortable about expanding the scope of the summit into nuclear weapons reduction and disarmament, and the call for concrete steps.
The Republic of Korea has done a commendable job in steering the conference in a prudent way. One of its striking features is that the conference agenda was kept away from multilateral politics and a consensual approach was adopted. The summit succeeded in creating a shared space for discussion and coordination.
Pakistan has keenly participated in the nuclear security summits. This indicates its continuity of resolve and abiding commitment to the cause. Since the Washington Summit, Pakistan has set up centres of excellence for training and emergency response mechanisms; upgraded physical protection arrangements; and revised export control lists. Following the Fukushima accident, it has conducted thorough stress tests of its nuclear power plants and is in the process of deploying Special Nuclear Materials (SNM) portals on key entry and exit points to prevent illicit trafficking of radioactive materials.
Pakistan is fully committed to continue working at the national level to maintain the highest standards of nuclear security and cooperate with the international community for achieving a secure and peaceful world.
A: There’s nothing wrong about China going around the world making resource deals to support its growing population. What it’s doing makes a lot of sense. Yes, my concern is that other countries will not catch on until it is too late. In a zero-sum world, what will happen if China wins the race for resources? Other countries seem to be asleep while China is making a concerted effort. Some 24 ongoing wars and violent conflicts have their origins in commodities, and this trend is poised to continue. China is befriending what I call “the Axis of the Unloved”—countries and regions such as Africa, Brazil, Colombia, Argentina and parts of Eastern Europe that have been basically ignored by the Western economies. China is the leading trading partner and foreign investor in many of these countries—a very different approach to the West’s largely aid-based model.
Q: The Chinese economic edge in this is that its state capitalism offers advantages that the Western laissez-faire model does not.
A: Favoured Chinese companies have a zero or near-zero cost of capital. State-owned banks provide highly concessional credit lines, in the form of government grants or low-interest loans. Favoured companies also benefit from tax breaks and the preferential allocation of key contracts. Like the US$12-billion credit line extended to Wuhan Iron and Steel, a major steel producer, by the state-owned China Development Bank, for ﬁnancing “overseas resource base construction.” And of course it helps to have a war chest of over US$3 trillion, while Western economies are struggling with cash constraints.
Q: The Chinese political edge is that it’s famously untroubled by governance issues in the countries it deals with.
A: Well frankly, in practice there is little to distinguish between the commodity counterparts of Western nations and those of China. U.S. and European countries are just as happy as China to strike deals with countries with less than pristine reputations—whether it’s Saudi Arabia, Venezuela or Russia. Two wrongs don’t make a right, but in this narrow sense, it’s unfair to constantly point fingers at China.
Q: So you think that criticism of China on both scores—cheating, so to speak, economically and being too comfortable with dictators politically—is often unfair and wrong?
A: Cheating is one thing, meddling in the markets is a whole other thing. Virtually all governments meddle in the commodities markets. Western governments are particularly egregious in this respect. The United States paid US$6 billion in commodity subsidies in 2010. OECD countries spend a total of US$226 billion on agricultural subsidies yearly. And in the EU, the Common Agricultural Policy sees some 40 billion euros spent on direct farm subsidies. So if meddling in the market is “cheating,” China has a lot of company. And the West has never had much of a problem dealing with despots and dictators if there is a benefit to be gained.
A: I think the reasons are quite clear. China pursues strictly business, symbiotic relationships, trading access to commodities for infrastructure, employment and other economic benefits. Take employment. The construction of the Imboulou Dam in [the Republic of the] Congo in 2010 employed 2,000 locals (compared to 400 Chinese). Survey results indicate that Africans much prefer to deal with the Chinese than with Westerners. In Ivory Coast, Mali, and Kenya, more than 90 per cent of respondents see China’s economic growth as “a good thing.” In Tanzania, 78 per cent agree, but only 36 per cent feel the same way about American influence. The difference is stark. Across the developing world, people want jobs, infrastructure and investment and the Chinese engagement does exactly that. ....
China confirmed this week it will sell a new 1,000-megawatt nuclear reactor to Pakistan that the United States says would violate Beijing’s obligations under a nuclear supplier control group.
Chinese Foreign Ministry spokesman Hong Lei was asked Monday about a report in the Free Beacon March 22 that first disclosed the secret agreement for the reactor reached last month in Beijing between the China National Nuclear Corp. and the Pakistan Atomic Energy Commission.
“China has noted the relevant report,” Hong told reporters in Beijing.
Normally, Chinese government spokesmen deny such reports and label them “groundless” as a way to avoid comment. The spokesman’s use of the phrase “noted the relevant report” is unusual and a tacit admission the report is accurate.
U.S. intelligence and diplomatic officials privately said the agreement was reached in Beijing during a visit by a high-level Pakistani delegation of nuclear industry officials from Feb. 15 to 18.
The Chinese at the meeting urged Pakistan to keep the deal secret to avoid expected international opposition by states that say the sale violates China’s commitment to the Nuclear Suppliers Group, a 46-member association aimed at preventing the spread of nuclear weapons.
China agreed in 2004 not to sell additional reactors to Pakistan’s Chashma nuclear facility beyond the two reactors that began operating in 2000 and 2011.
However, Hong denied the sale violates the voluntary NSG guidelines.
“The cooperation between China and Pakistan does not violate relevant principles of the Nuclear Suppliers Group,” he said. “In recent years, China and Pakistan do indeed carry out some joint projects related to civilian use of nuclear energy. These projects are for peaceful purpose only, in compliance with the international obligations shared by both countries, and they are subject to guarantee and monitor by international atomic energy organization.”
However, U.S. intelligence officials said the China National Nuclear Corp. (CNNC) is Beijing’s main nuclear weapons producer and is working to modernize Pakistan’s nuclear arsenal in addition to the civilian reactor construction at Chashma.
China also is working to develop Pakistan’s nuclear fuel reprocessing capabilities, the officials said....
Friday, March 29, 2013 - Islamabad—China is committed to invest heavily in Pakistan’s energy and other sectors to improve lives of people, Deputy Chief of Mission of the Chinese Embassy Yao Wen said Thursday.
Speaking at a function at a local school here, Yao Wen said Chinese are already working on 120 projects in Pakistan with around a quarter related to energy.
In addition, during the last five years volume of bilateral trade has grown by 70 per cent to over $ 12 billion with Pakistani exports increased two-fold from $1 billion to $2.2 billion, he informed.
Yao Wen stressed the need for enhancing collaboration between educational institutions and exchanges of students and researchers to promote intellectual cooperation.
Lauding the role of Pakistan in regional and global peace, stability and development, he said that Pakistan has offered great sacrifices to ensure peace.
Speaking on the occasion, President Ex-Chinese Association Raza Khan lauded the Chinese assistance and cooperation in various fields, terming it a great service to people of Pakistan.
He lauded the active involvement of Chinese Ambassador Liu Jian in capacity building of students and said that supporting needy students was a great service for social development. Raza Khan stressed the need for increasing people-to-people exchanges to promote understanding and carry forward cause of Pak-China friendship.
Terming China a sincere friend, Joint Secretary Ministry of Education Prof. Muhammad Rafiq Tahir said that two countries should fully unleash their potential of cooperation to benefit masses.
KARACHI: A Chinese world famed company, Chinese Power International Holding will set up ten coal fired power plants of 660 MW each, making total 6600 MW, at Thar coal fields ; with total estimated investment of dollars 7.2 billion.
A memorandum of understanding was earlier inked between China Power International Holding and the Sindh Government for these power plants. Signatory to this MOU were SECMC and Global Mining Company (GMC)/ Sino Sindh Resources (SSR).
Coal will be supplied by SECMC and GMC/SSR from Blocks I and II of Thar coal fields.
Sindh Chief Minister Syed Qaim Ali Shah, during a press conference here at the Chief Minister House on Monday on his return from his visit to China, said many Chinese companies showed their interest to invest in Pakistan especially in Sindh.
He informed the Chinese investors that his Government was creating an enabling environment for potential investors in developing infrastructure, coal mining, coal and wind power generation in the province. Thar coal fields have estimated reserves of 175 billion tons. These reserves could be utilised to produce 100,000 MW of power for many decades.
He also informed that public private partnership had been initiated through an international competitive bidding process to ensure fast track development of Thar coal.
He assured on behalf of the government of the provision of requisite infrastructure adding that the investors would find Thar as an exceptionally peaceful area.
The Chief Minister, giving the details of his 5-day visit to China-- Sichuan province's capital Chengdu and China's capital Beijing- said his Government sought Chinese investment in development of Thar Coal mining and coal- based power generation, development of Wind Corridor and technical assistance in modernising agriculture.
The Chief Minister visited Chengdu to participate in the 14th Western China International Fair on invitation of Governor Sichuan, Wei Hong.
Sichuan province has a strong economy with a GDP of dollars 383 billion. It has robust agriculture, water management, strong mining technology coupled with high tech industry in Chengdu.
Sichuan province Governor, Wei Hong assured all possible support to Sindh Government for collaboration in Thar Coal mining, coal and wind based power generation and establishment of an industrial zone in Sindh.
Sichuan Governor and Deputy Secretary General of Chinese Communist Party, Li Jiaguo accepted his invitation and assured to visit Sindh province, said Syed Qaim Ali Shah.
Syed Qaim Ali Shah witnessed the signing ceremony of 249.6 MW Engineering Procurement Construction (EPC) contract signed between NBT Wind Power Pakistan II, a subsidiary of NBT Pakistan Holding (Pvt) Ltd of Singapore (NBT) and Harbin Electric International to build the largest wind farm in Pakistan using 156 units of 1.6 MW wind turbines made in China.
NBT is developing 650 MW of wind farms in the wind corridor of Sindh.
NBT, Harbin Electric International and GE are working jointly with a bank syndicate on project financing for this wind farm. The EPC contract includes 5 years of operation and maintenance services to wind turbines......
China has committed $6.5 billion to finance the construction of a major nuclear power project in Pakistan's port city of Karachi as it seeks to strengthen ties with its strategic partner, Pakistani officials said.
Pakistani Prime Minister Nawaz Sharif broke ground on the $9.59 billion project last month but officials have provided few details of how they plan to finance it.
Financing documents seen by Reuters showed China National Nuclear Cooperation (CNNC) has promised to grant a loan of at least $6.5 billion to finance the project which will have two reactors with a capacity of 1,100 megawatts each.
Two members of the government's energy team and three sources close to the deal confirmed this. CNNC was not available for comment.
"China has complete confidence in Pakistan's capacity to run a nuclear power plant with all checks in place," said Ansar Parvez, chairman of the Pakistan Atomic Energy Commission which runs the civilian nuclear program.
"As things stand, the performance and capacity of nuclear power plants in Pakistan is far better compared to non-nuclear plants."
Parvez declined to give more details of the funding but said it would be completed by 2019 and each of the two reactors would be larger than the combined power of all nuclear reactors now operating in Pakistan.
As part of the deal, China has also waived a $250,000 insurance premium on the loan, said two sources in the Energy Ministry with knowledge of the project. They declined to be identified as they are not authorized to speak to the media about the financing.
Pakistan and China, both nuclear-armed nations, consider each other close friends and their ties have been underpinned by common wariness of India and a desire to hedge against U.S. influence in South Asia.
Pakistan sees nuclear energy as key to its efforts to solve power shortages that have crippled its economy. Pakistan generates about 11,000 MW of power while total demand is about 15,000 MW.
Blackouts lasting more than half a day in some areas have infuriated many Pakistanis and sparked violent protests, undermining an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.
Under its long-term energy plan, Pakistan hopes to produce more than 40,000 MW of electricity through nuclear plants by 2050.
The United States sealed a nuclear supply deal with India in 2008, irking both China and Pakistan....
In an exclusive interview with Geo News programme Aaj Kamran Khan Kay Sath, Shahbaz Sharif said China would provide the historic assistance of $30 billion for power generation in the country, however, Pakistan would identify the projects.
ISLAMABAD: South Asia should spend as much as $2.5 trillion on infrastructure by 2020 to bring its power grids, roads and water supplies up to the standard required to serve its growing population, said a World Bank report on Wednesday.
“If South Asia hopes to meet its development goals and not risk slowing down — or even halting — growth, poverty alleviation and shared prosperity… it is essential to make closing its huge infrastructure gap a priority,” the report said in probably the first analysis of the region’s infrastructure needs.
The report, entitled “Reducing poverty by closing South Asia’s infrastructure gap”, says that “infrastructure deficiencies in South Asia are enormous, and a mix of investment in infrastructure stock and implementing supportive reforms will enable the region to close its infrastructure gap”.
Pakistan should invest $165 billion over ten years in improving infrastructure in transport, electricity, water and sanitation, solid waste, telecom and irrigation sectors, according to the report.
For the required investment in electricity sector of up to $96bn, Pakistan should generate funds through government-private sector partnership, the report said.
The average share of Pakistan in the total infrastructural investment in South Asia is only 12 per cent compared to 79 per cent by India, the report says.
18 June 2019
The outer safety dome has been installed on the containment building of unit 2 at the Karachi nuclear power plant in Pakistan. The unit is the first of two Chinese-supplied Hualong One reactors being built at the site.
The steel dome - measuring about 53 metres in diameter and over 23m in height, and weighing about 366 tonnes - was placed upon the top of the containment building walls at 8:06am yesterday, China National Nuclear Power (CNNP) has announced.
The Hualong One uses a double-layer safety shell design. Together with the inner protective dome, the outer dome protects the reactor and prevents the release of radioactive materials into the environment in the event of a serious accident.
"The successful hoisting of the outer safety dome has marked the end of the main structural project of the nuclear power plant, which has created favourable conditions for the overall test and thermal test of the subsequent containment," CNNP said.
Karachi 2 and 3 are the first export of China's Hualong One design, with construction of unit 2 beginning in 2015 and unit 3 in 2016. Installation of the reactor internals at unit 2 was completed in January this year. The units are scheduled for commercial operation in 2021 and 2022, respectively.
In addition to the two units under construction in Pakistan, four Hualong One units are being built in China. China National Nuclear Corporation is constructing two units at its Fuqing plant in Fujian province, while China General Nuclear (CGN) is building two at its Fangchenggang site in Guangxi province. All four units are expected to enter commercial operation in 2019-2020.
CGN proposes to use a UK version of its Hualong One design - the HPR1000 - at a prospective new nuclear power plant at Bradwell, England.
With its mission to cover all fuels and technologies, the IEA hopes that the publication of its first report addressing nuclear power in nearly two decades will help bring the topic back into the global energy debate. The report is being released during the 10th Clean Energy Ministerial in Vancouver, Canada.
“Without an important contribution from nuclear power, the global energy transition will be that much harder,” said Dr Fatih Birol, the IEA’s Executive Director. “Alongside renewables, energy efficiency and other innovative technologies, nuclear can make a significant contribution to achieving sustainable energy goals and enhancing energy security. But unless the barriers it faces are overcome, its role will soon be on a steep decline worldwide, particularly in the United States, Europe and Japan.”
The new report finds that extending the operational life of existing nuclear plants requires substantial capital investment. But its cost is competitive with other electricity generation technologies, including new solar and wind projects, and can lead to a more secure, less disruptive energy transition.
Market conditions remain unfavourable, however, for lengthening the lifetimes of nuclear plants. An extended period of low wholesale electricity prices in most advanced economies has sharply reduced or eliminated profit margins for many technologies, putting nuclear plants at risk of shutting down early.
In the United States, for example, some 90 reactors have 60-year operating licenses, yet several have already retired early and many more are at risk. In Europe, Japan and other advanced economies, extensions of plants’ lifetimes also face uncertain prospects.
Investment in new nuclear projects in advanced economies is even more difficult. New projects planned in Finland, France and the United States are not yet in service and have faced major cost overruns. Korea has been an important exception, with a record of completing construction of new projects on time and on budget, though government policy aims to end new nuclear construction.
A sharp decline in nuclear power capacity in advanced economies would have major implications. Without additional lifetime extensions and new builds, achieving key sustainable energy goals, including international climate targets, would become more difficult and expensive.
If other low-carbon sources, namely wind and solar PV, are to fill the shortfall in nuclear, their deployment would have to accelerate to an unprecedented level. In the past 20 years, wind and solar PV capacity has increased by about 580 gigawatts in advanced economies. But over the next 20 years, nearly five times that amount would need to be added. Such a drastic increase in renewable power generation would create serious challenges in integrating the new sources into the broader energy system. Clean energy transitions in advanced economies would also require $1.6 trillion in additional investment over the same period, which would end up hurting consumers through higher electricity bills.
Energy supply statistics are given in Table 2. During the past decade (2007–2017), indigenous oil production has been at a level of about 64 000–95 000 barrels per day (equivalent to about 17–21% of the country’s oil consumption). Pakistan’s natural gas production in fiscal year 2016–17(1) was 4 032 million cubic feet per day.
In 2016–2017, coal production was 4.2 million t, while 7 million t of coal was imported to meet the industrial requirements of the country. The development of the coal mining industry in Pakistan, particularly for power generation, is hampered by constraints relating to the quality of coal, mining difficulties and other organizational constraints.
In 2016–2017, hydropower provided 26% of the electricity in Pakistan. Additional hydro projects varying in size, ranging from medium to micro, are under construction and the capacity of some existing hydro projects is being extended. Meanwhile, there are medium and large hydroelectric projects, awaiting official decision, are either proposed or are being planned.
Nuclear power generation contributed 6.2% to the total electricity generation of Pakistan in 2017. At present, the country has five operational nuclear power plants that have a cumulative generating capacity of 1 430 MW, while two reactors are under construction.
Pakistan started construction of its first nuclear power plant, KANUPP, in 1966 in Karachi. The plant was connected to the national grid on 18 October 1972. KANUPP, a pressurized heavy water reactor of 137 MW gross capacity was constructed by Canadian General Electric under a turnkey contract. In 1976, vendor support for spare parts and fuel was withdrawn. The PAEC undertook the task of indigenously manufacturing the required spare parts and nuclear fuel on an emergency basis and, since 1980, KANUPP has successfully operated using fuel manufactured by the PAEC.
Despite the keen interest of Pakistan in building additional nuclear plants, it took more than two decades before the second nuclear power plant started construction. This delay was due to Pakistan’s lack of access to international nuclear technology coupled with a lack of indigenous industrial infrastructure. The construction of Pakistan’s second nuclear plant, C-1, a pressurized water reactor (PWR), was made possible in 1993 with the help of the China National Nuclear Corporation (CNNC). The plant was connected to the national grid on 13 June 2000 and has a gross capacity of 325 MW. A third nuclear power plant, C-2, with 325 MW gross capacity started commercial operation on 18 May 2011. The fourth unit, C-3, started commercial operation on 6 December 2016. It has a gross capacity of 340 MW and a similar plant, C-4, sited beside C-3, was connected to the grid on 25 June 2017. The first concrete pours to mark the start of construction of Karachi Coastal Power Project, a project containing two nuclear units, K-2 and K-3 (1100 MW each), based on an improved PWR design, were 20 August 2015 and 31 May 2016, respectively.