November 10, 2006	Friday	Shawwal 17, 1427

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ISLAMABAD, Nov 9: Pakistan and China are likely to make progress later this month on more than $15 billion Chinese investments that would include a mammoth oil refinery in Gwadar and a pipeline to deliver its refined products to Kashghar besides coal mining and power production in Thar district of Sindh.

The signing of a formal agreement is scheduled to be held in Islamabad on Nov 23, coinciding with the visit of China’s President Hu Jintao. The agreement also encompasses to expand the production capacity and extension of productive life of the Saindak-Copper Gold Project in Balochistan costing about $50 million.

Sources told Dawn on Thursday that a delegation led by Deputy Chairman of Planning Commission Dr Akram Sheikh and also involving Secretary Petroleum Ahmad Waqar is currently in China to set the pace for some tangible announcements when President Hu Jintao visits here from 23-26 this month. It will be Hu Jintao’s first trip to Pakistan since he became president in 2003.

During the visit, the two sides would also come close to a landmark agreement for nuclear cooperation that would set the stage for setting up of six nuclear power projects, with a total generation capacity of 2,700 megawatts. Three of these projects would be of 600MW each and another three of 300MW.

These sources said China was expected to make a formal announcement during Mr Jintao’s visit to set up an oil refinery at Gwadar with a total capacity to refine 21 million tons of oil per annum. He said the project will have two components including a petrochemical complex and oil storage. This project alone is estimated to cost about $10-12 billion.

The two projects - the refinery and the oil pipeline - is part of the Energy Corridor the two countries have been discussing for quite some time and have reached an advance stage of documentation. Pakistan's total refining capacity at present is about 12.5 million tons.

The talks a $1-1.5 billion project that involves mining of coal from one block at Thar coupled with power production are also in progress in Beijing. The talks with the Shenhua group had resumed last month following an impasse of over 15 months. Pakistan had turned down Shenhua’s demand for 5.7 cents per unit tariff for Thar project. Now, the Chinese group has increased its demand for 6.5 cents per unit and some circles in the government are inclined to accept this offer given the fact that tariff from other competing fuels was quite higher except for hydroelectric plants, the source said.

Separately, Pakistan has also offered to China to become equity partner in the setting up of $500 million Thar Coal Mining Company (TCMC) that would develop remaining five blocks of the huge coal deposits at Thar. Its management would be in the private sector but the federal government would also provide over $100 million equity besides sovereign guarantees to the partners.

The official said under an agreement signed with Chinese Metallurgical Corporation about two years ago, the production capacity of Saindak-Copper Gold Project had been enhanced from 15,800 tons to over 20,000 tons per annum. As a result, the life of the project would come down from originally planned 19 years to 12 years. Its proven reserves were estimated at 78 million tons.

To prolong life of the project to 25 years, another agreement with the same operator would be signed to bring to production East-Ore Body of Saindak area and blend it with the production of existing South-Ore body for a better price. The proven reserves of the new body at about 200 million tons, said these sources, were about two times higher than the existing body but the copper and gold concentration in the new one is much lower.