Port Qasim Coal-fired Power Project: CPEC’s first project witnesses emphatic progress on ground

The $2.085-billion project which will generate 1,320MW of power to be completed by June 2018

Malik Azhar is a happy man today. He has received his first increment – a 20 per cent bump in his salary. For Azhar, this is a dream come true, and in such a short span of time. Only last year, he had no job and a family to feed. But now, he has a job as a driver working for Powerchina, which hired him last year for the Port Qasim Coal-fired Power Project.

Pakistan Today recently visited Port Qasim Power Project’s site to learn about the progress on the project as well as the effect that it was having on the local community. A number of Chinese companies are working inside Pakistan on various projects under the China Pakistan Economic Corridor (CPEC) agreement between the two countries. The Port Qasim project is being jointly developed by Power Construction Corporation of China through Powerchina Resources Limited and Al Mirqab Capital S.P.C. Powerchina and Al Maqrib have holding of 51% and 49% shares respectively on Build-Own-Operate (BOO) basis in the 1320MW power project.

The project ranks first among the Priority Implementation Projects in the energy sector being developed under CPEC. This is one of the early harvest projects and is expected to achieve commercial operation status by June 2018. The project, however, will start generating power by the end of 2017.

Malik Azhar is not a local – he hails from a small village near Rawalpindi. He has travelled to Karachi in search of a living.

“Most of the people working on this project are locals. But outsiders like myself are also getting hired. I came here looking for work, and I’m very happy here. I am planning to work here in future also,” Azhar said.

Azhar is one of around 1,700 Pakistanis working on the project. As work on the project gathers pace, thousands more are likely to join the workforce in the next few months.

PROJECT COMPLETION:

Port Qasim is a 2x660MW coal-fired power project. It is located in the Port Qasim Industrial Park, 37 km Southeast of Karachi. It comprises two units with total gross capacity of 1320 MW (with integrated self-use Jetty) and an average annual energy output of around 9000GWh, able to support 3-4 million families’ power consumption for a year. Fueled by imported coal, the project adopts the world’s leading supercritical thermal technology.

The environment-friendly operations including seawater desalination and flue gas desulfurisation, satisfying the environmental standards of the World Bank.

The generated power will be evacuated through a 180km-long 500KV AC transmission line connecting the project with the national grid. The construction period of the project is 36 months.

“The total investment of the project is approximately $2.085 billion. The ratio of equity is approximately 25 per cent, while the rest will be arranged by the sponsors through debt financing from the Import-Export Bank of China (China EXIM Bank),” said He Shiyou, the assistant general manager of the Port Qasim Electric Power Company while talking to Pakistan Today.

“This arrangement does not increase the financial burden on the government of Pakistan. Rather this burden will have to be borne by the companies involved,” he clarified.

OVER 2,000 JOBS:

About the power generation and job creation opportunities, one of the management officials said that the project directly creates more than 2,000 job opportunities for Pakistani engineers and laborers during the construction phase, and will employ around 400 trained professionals during operational stage.

The project being supported by both the Chinese and the Pakistani governments, has seen a fast pace of work and is on track for its completion in June 2018.

The agreements for the project’s implementation, power purchase, land lease and port services were signed during President Xi’s visit to Pakistan in April 2015.

Most of the documentary process has been finalised with the coordination of the Ministry of Commerce of China and the government of Pakistan. The company working on the project has obtained all the approvals required by the governments of China and Pakistan.

The financial close of the project was achieved and the first draw-down of about $200 million was made from China’s Exim Bank in December last year. The project is the first large coal-based power project under the CPEC to receive financial close.

The construction of the plant started on May 7, 2015. The feasibility study report, preliminary design report, and the master plan have been completed and approved. Over 87.06 per cent of the engineering work milestones were achieved till December 31, 2015. The engineering work of the plant is expected to be completed by the end of July 2016.

Massive construction of the Jetty and the Channel started from August 12th, 2015 while 9 out of 19 construction drawings have been submitted.

One cutter suction dredger, one anchor boat, earthwork machines, haulage vehicles and a concreting machine have already been mobilised to the project site. Dredging works of Basin and Channel are underway.

But although a lot of progress has been achieved on the ground, the project is also facing some hiccups.

Background interviews with the officials in the federal and Sindh governments show that the Sindh government is not ready to own the project due to the massive media campaign by the federal government.

“Since the PML-N government is taking all the credit for the project, the Sindh government is creating hurdles in the project’s implementation,” a source in the federal government told Pakistan Today.

REGISTRATION OF INDENTURE OF LEASE

Pursuant to the agreement dated April 23rd, 2015 signed between Port Qasim Authority and the company, approximately 200 acres of land in the Eastern Zone of Port Qasim has been allotted to the project.

It is clearly stated in the PQA Agreement that “PQA shall have good marketable and completely unencumbered lawful title to the site including all easements and rights of way”.

The Powerchina has paid all the fees, levies, and stamp duties to relevant authorities of the government of Sindh and approached the Registrar to register Indenture of Lease in accordance with the regulations stipulated by the Sindh Board of Revenue.

However, the officials of the Board of Revenue are dragging their feet by raising objections, claiming that the 200-acre land belongs to the GoS and PQA is not entitled to lease it.

WATER SUPPLY:

A coordination meeting for water supply to the Project was held on November 11, 2015 in Karachi. The Karachi Water and Sewage Board (KW&SB), Engro-chemical plant near the project site, and the Powerchina company entered into a tripartite agreement for water supply on December 2, 2015.

Under the deal, water had to be provided to the project on the condition that a no objection certificate (NOC) was issued by the government of Sindh. The internal pipe network of the project has been completed, but the Sindh government has not issued the NOC despite repeated requests.