ISLAMABAD: Minister for Planning, Development and Special Initiatives Ahsan Iqbal has claimed that Pakistan will not bear the Sinosure cost of Chashma Nuclear Power Plant-5 (C-5) as the Contractor will bear the cost of Sinosure.
In written comments on a summary of Strategic Planning Division on C-5, Ahsan Iqbal said that Committee constituted by Prime Minister Office (PMO) on February 1, 2023 held a meeting with China National Nuclear Corporation (CNNC) on February 02, 2023 at Karachi Nuclear Power Generating Station after the inauguration of Karachi Nuclear Power Plant Unit-3 (K-3) by the Prime Minister.
In another meeting with the committee and CNNC on March 03, 2023, Prime Minister directed Pakistani side to visit China and convince them for a reduction in EPC contract price of C-5 Project, as well as capitalization of Interest during Construction (IDC).
According to the Minister, a delegation comprising of four committee members visited Beijing and held meeting with CNNC on April 03-04, 2023. A delegation of China National Nuclear Corporation Overseas Limited (CNOS) headed by its President, visited PAEC HQ on June 08-09, 2023 for finalization of financial terms of C-5 Project. After rigorous discussions, both sides agreed for reduction of RMB 750 million in the contract price of C-5 Project, as well as, capitalization of Interest during Construction for 8 years.
The Minister further claimed that on June 20, 2023, during said committee meeting in PM House chaired by Prime Minister the proposal of CNNC/ CNOS was discussed and agreed by all committee members. The financing agreement of C-5 Project was then signed between PAEC and CNOS in presence of Prime Minister.
Following are the salient feature of project/ financing agreement: (i) CNNC has not only reduced the price of C-5 Contract, but also enhanced its capacity from 1100-MWe to 1200-MWe; (ii) Pakistan will not have to pay in Foreign Exchange for first eight years; (iii) repayment period of the loan will be 12 years; (iv) interest rate will be 3 % which is lower than the basket interest rate 3.2% of Karachi Nuclear Power Plant II and III; (v) no management and commitment fee for whole loan tenor; (vi) no Sinosure for PAEC. Contractor will bear the cost of Sinosure; and (vi) design life of plant is 60 years, extendable up to 80 years. However, there are reports of differences between Power Division and Planning Division on financing of the project.
Ministry of Planning, Development and Special Initiatives, in its comments on the summary, has stated that due to limited fiscal space, upfront availability of PSDP funding cannot be committed; however, it could be considered based on proportionate PAEC share as per PC-1 processing and approval by the competent forum. In any case, nuclear power plants should have full cost recovery through tariff.
However, Power Division maintains that power commitment for providing 80% of the revenue from the existing nuclear plants cannot be given at this stage since there are multiple factors that impact on payments to different power plants. Any additional amount more than revenue streams of existing power plants may be provided through PSDP or any other funding mechanism by the Finance Division.
It is not clear if financing mechanism is finalized as Secretary Finance who suggested seeking comments of Economic Affairs Division on the summary of Strategic Planning Division did not offer his own comments on a message sent to him one week ago by this correspondent.
Copyright Business Recorder, 2023
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