ISLAMABAD: The government on Tuesday announced financial closure for $1.9 billion worth of 1,320-megawatt, coal-based power project at Port Qasim, Karachi to be completed by end-2017.

This is the first major project under the $46bn China-Pakistan Economic Corridor (CPEC) to have achieved financial closure. The plan for the project had been put together by Saifur Rahman, a former chairman of Ehtesab Bureau and a closed confidant of Prime Minister Nawaz Sharif.

At a ceremony in the country’s capital, senior executives of the Private Power Infrastructure Board (PPIB) — a one-window operation of the water and power ministry — and the Chief Executive of Port Qasim Electric Power Company formally signed financial closure documents.

The project is jointly sponsored by Sinohydro Resources Limited of China and Al-Mirqab Capital of Qatar, with the China Exim Bank providing $1.9bn financing to the project.

Financial closure of a project is the key sign of project implementation as this is followed by initiation of construction work. An official said the financial closure was earlier scheduled to be achieved by September 2015 but was slightly delayed because of the loan approval process.

The first of the two units, of 660MW each, is expected to start supplying power to the national grid by September 2017. Full commercial operation of the project, which would utilise imported coal, is targeted for first quarter of 2018.

The PPIB and the project company signed Implementation Agreement (IA) and Power Purchase Agreement (PPA) on April 18 this year when Chinese President Xi Jinping visited Islamabad. The project is being implemented as “prioritised project” under the CPEC launched by the governments of China and Pakistan.

The National Electric Power Regulatory Authority (Nepra) has already approved a 30-year upfront levelised tariff of 8.12 US cents per unit for the 1,320MW project at Port Qasim.

Prime Minister Nawaz Sharif performed the groundbreaking of the project on May 7 last year.

The coal-fired project also involves Sinosure insurance fee of 7 per cent on the total debt servicing, which stands at 75pc of the project cost.

As promised by Mr Sharif to Chinese leadership, the regulator had introduced a new procedure of upfront tariff under which it was clearing CPEC-related projects within 10 days after filing of application.

The prime minister declared Port Qasim project as the first plant under the economic corridor in which Beijing would invest $33bn.

Published in Dawn, December 23rd, 2015