Pakistan Turned To China To Address Power Shortages, Now Faces Severe Pollution And Crippling Debt For Coal Plants

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Pakistan’s electricity shortages have persisted for decades. But the hours-long rolling blackouts that started in 2011 and continued into 2015 were among the worst in recent memory, plunging communities into darkness, shuttering factories and stalling economic growth. Under pressure, the conservative Pakistan Muslim League-Nawaz (PML-N) party then in power scrambled for fixes to calm public anger and reboot the economy. China offered one. Its talks with the PML-N government for the multibillion-dollar Pakistan component of the Belt and Road, the China–Pakistan Economic Corridor, or CPEC, included the slate of coal-fired plants.

The nations struck a deal on the CPEC framework in 2015, but the year before, top Pakistani leaders had already held a groundbreaking ceremony for the Sahiwal plant to celebrate what they saw as an economic turning point. An environmental impact assessment for the project, prepared for the plant’s operator, argued that hydropower would be too slow to develop and domestic gas too unreliable. A coal plant with technology that required imported fuel was the only viable response to the “acute power shortages,” the assessment concluded.

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Built for $1.9 billion by a subsidiary of the state-owned China Huaneng Group, the plant was one of many Belt and Road projects constructed by Chinese firms across the Global South. Afia Malik, an Islamabad-based energy economist with the Pakistan Institute of Development Economics, a government research organization, said the decision to rely on imported coal that Chinese investors found more viable than Pakistan’s domestic resource locked it into foreign fuel dependence and price volatility. The terms of the contracts have caused even more problems for Pakistan.

The government agreed to pay the plant operators for 85 percent of the electricity each facility is capable of generating, whether that amount was generated or not, she said. Pakistan already had experience with that “take-or-pay” structure. Pushed by the World Bank and other multilateral lenders to address electricity shortages in the 1990s with privatization, the country agreed to contracts with Western independent power producers that also guaranteed minimum payment based on capacity. But that threshold was 65 percent, not 85, Malik said. And even so, Pakistan is paying billions each year for 1990s-era plants operating at low levels.​

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https://insideclimatenews.org/news/25012026/pakistan-energy-crisis-chinese-coal-plants/