Chinese company, M/s CHIC Pak Power Company (Pvt.) Limited (CPPCL) is reportedly unwilling to shift proposed 300-MW power plant at Gwadar from imported coal to Thar coal, sources close to Managing Director PPIB told Business Recorder.
CPPCL’s Chairman, Zhao Bo, sources said, has given reference of the latest correspondence/ discussions between two sides regarding the relocation of the 300-MW Gwadar Power Plant and LoS extension.
He said that following the lenders’ due diligence on the project along with their legal counsel, the latter has briefed the former that the Letter of Support (LoS) extension period is far too short to complete financing and that there has been no progress on the extension in the Required Commercial Operation Date (RCOD) request delivered to PPIB from CPPA-G.
The lenders have conveyed their legal counsel’s concerns to the Project Company for resolution. The lenders are also aware of the LoS extension being made subject to relocation or change in the fuel of the project. The lenders have; therefore, proposed to resume work on project financing once PPIB allows the Company to go ahead with the project based on imported fuel instead of relocation.
The lenders have further highlighted that relocation of the project or a change in design fuel entails the development of a completely new project and that not only such change will render useless the efforts in project financing being undertaken at the bank, as well as, Sinosure but will leave very negative impact at these institutions.
M/s CPPCL has once again requested the GoP entities to not consider any alteration in the project since tremendous and unprecedented efforts have been made at the government level to seek a special approval for financing this project in April 2022.
The lenders have also reminded the project company that as per the Chinese government, policy was finalized two years ago and now they will not be able to finance any new overseas coal-based power plants.
According to company, the lenders’ headquarter has already made the initial loan approval; however, certain preconditions require NEPRA and PPIB’s assistance. Sinosure Corporation also conducted a review meeting on the project a day before the recent visit of Prime Minister Shehbaz Sharif to China and as per the company’s understanding leaders of both countries made a bilateral consensus on accelerating the construction of supporting infrastructure for the Gwadar Sea Port given the urgent electricity demand of residents and potential investors following the time consuming discussions during the past six years.
“We once again request PPIB to grant the LoS extension as per company’s request for a period of three years based on imported fuel which was the original basis for the project agreed upon between the two governments and has also been the basis for the financing process,” said, Chairman CPPCL Zhao Bo, adding that imported fuel shall be the primary source, subject to meeting the plant technical specifications, NEPRA consent, and availability. The Project Company may also purchase coal from Afghanistan or Balochistan to minimize the use of the foreign exchange.