China-Pakistan Energy Cooperation

1. Sino-Pakistan Relations

China and Pakistan are all-weather partners of strategic cooperation.

In 2013, the strategic cooperative partnership between the People's Republic of China and the Islamic Republic of Pakistan was further enhanced, and bilateral exchanges and cooperation in various fields deepened.

The two countries maintained frequent high-level exchange of visits and deepened political mutual trust. The two prime ministers exchanged visits within a short span of time. In May, Premier Li Keqiang visited Pakistan. He held talks with President Asif Ali Zardari and caretaker Prime Minister Hazar Khan Khoso, and met with Prime Minister-elect Mian Muhammad Nawaz Sharif. The two sides issued the Joint Statement on Deepening Comprehensive Strategic Cooperation Between the People's Republic of China and the Islamic Republic of Pakistan. In July, Prime Minister Sharif visited China. He met with President Xi Jinping, held talks with Premier Li Keqiang, and met with NPC Chairman Zhang Dejiang. The two sides issued the Common Vision for Deepening China-Pakistan Strategic Cooperative Partnership in the New Era. In the same month, Foreign Minister Wang Yi met with Sartaj Aziz, Adviser to the Prime Minister on National Security and Foreign Affairs of Pakistan, on the margins of the ARF meetings in Brunei Darussalam. In September, Foreign Minister Wang Yi met with Prime Minister Sharif during the UN General Assembly in New York. In November, Foreign Minister Wang Yi met with Sartaj Aziz, Adviser to the Prime Minister on National Security and Foreign Affairs of Pakistan, on the sidelines of ASEM Foreign Ministers' Meeting in New Delhi.

Pragmatic cooperation between the two countries saw major breakthroughs, and cooperation was deepened in energy, finance, infrastructure and other key areas. During Premier Li Keqiang's visit to Pakistan, the two sides signed the Memorandum of Understanding on Cooperation for the Long-term Plan on China-Pakistan Economic Corridor Between the Government of the People's Republic of China and the Government of the Islamic Republic of Pakistan. In July, during Prime Minister Sharif's visit to China, the two sides signed the Memorandum of Understanding on the Cooperation of Developing "China-Pakistan Economic Corridor" Long-term Plan and Action Between National Development and Reform Commission of the People's Republic of China and Ministry of Planning and Development of the Islamic Republic of Pakistan. The economic corridor is mainly about cooperation in three areas, namely, transport, energy and industrial parks. It builds a new platform for the growth of China-Pakistan strategic cooperative partnership in the next five to ten years. In August, Zhang Xiaoqiang, Vice Minister of the National Development and Reform Commission (NDRC), led a Chinese delegation to the inaugural meeting of the Joint Cooperation Committee on the Long-term Plan for the China-Pakistan Economic Corridor in Islamabad, which marked a new phase of steady implementation and solid progress of the China-Pakistan Economic Corridor.

2.  Sino-Pakistan Economic and Trade Relations

Pakistan is the first South Asian country to sign a free trade agreement and currency swap agreement with China, and it is the largest destination of Chinese investment in South Asia. China is Pakistan's second largest trading partner and fourth largest export market.

Statistical Chart for Sino-Pakistani Trade

(unit: billion US dollars)

(It’s compiled according to China General Administration of Customs.)

3. China-Pakistan Energy Cooperation

China-Pakistan Economic Corridor Energy Cooperation

China-Pakistan Economic Corridor(CPEC)is the major and pilot project of the Belt and Road Initiative proposed by Chinese President Xi Jinping in 2013. CPEC refers to the integrated economic and trade zone extending along the traffic corridor between Kashgarin Xinjiang Uygur Autonomous Region of China and Gwadar Port, Pakistan. The cooperation field of CPEC focuses on energy, traffic infrastructure and industry parks. It aims at deepening the strategic cooperation between the two nations and promoting common development. As the flagship project under the Belt and Road Initiative，CPEC will bring about unprecedented interconnection and set up a new benchmark for the bilateral cooperation between China and Pakistan.

Energy is the key area of CEPC cooperation. Under the great efforts of the governments and enterprises of the two nations, significant achievements have been made in energy and power cooperation. Both sides have built up close partnership in energy cooperation and done substantial concrete work in development mechanism, investment and construction, technical standards, and social responsibility.

The CPEC mechanism has been playing an active role in the energy cooperation between the two nations, having held Joint Committee Meetings six times, Working Group Meetings four times and Expert Workshops twice and coordinated the key issues, such as external cooperation conditions, investment and financing policies, and major problems. It has been providing strong support for the CPEC energy projects.

Rapid progress has been made in the CPEC energy projects. Among all the CPEC energy projects, 14 projects are listed as "Prioritized Projects" and 7 projects are listed as "Propulsive Projects", with the total installed capacity of 17,040MW. A number of projects, such as Port Qasim Coal-fired Power Plant, Karot Hydropower Station, Dawood Wind Farm, and Engro Thar Coal Block Ⅱ, are under construction or have been put into operation, with a total installed capacity of 6,810MW, effectively easing the power shortage in Pakistan.

The CPEC energy cooperation has seen remarkable progress and will continue to move forward under the joint efforts of China and Pakistan.

4. Project Cases

(1)Wind Power Projects

①Dawood Wind Power Project

Dawood Wind Power Project, invested by HydroChina International, is one of the 14 "Prioritized Projects" in China-Pakistan Economic Corridor Energy Cooperation. On April 20, 2015, Chinese President Xi Jinping and Pakistan Prime Minister Nawaz Sharif witnessed the Handover Ceremony of the Financial Close Confirmation Letter and the live Commencement Ceremony of the Dawood Wind Power Project in Islamabad. Dawood Wind Power Project, sponsored by Chinese investors, is one of the program that witnessed the financial closure and construction among the 14 CPEC "Prioritized Projects".

Project Profile:

Location: 60km east from Karachi

Installed Capacity: 50MW

Annual Power Output: 130GWh

Business Model: Chinese Investment

Investment: 115 Million USD

Progress:

Apr 20th, 2015, commencement of Construction

Jan 23rd, 2017, the first generation unit has been combined to the grid successfully

Apr 4th, 2017, entering into commercial operation

②Sachal Wind Power Project

Sachal Wind Power Project is one of the 14 "Prioritized Projects" in CPEC Energy Cooperation. It is located in Sindh Province in the east of Pakistan, 100 km northeast of Karachi. It is the first new energy project of CPEC to conclude the loan agreement. The construction period of the project is 500 days. It is carried out as an EPC project by HydroChina Corporation.

Project Profile

Location: Jhimpir District, Thatta County, Sindh Province, east of Pakistan, 100km northeast of Karachi

Installed Capacity: 49.5MW

Annual Power Output: 160GWh

Annual Availability: 3000 hours

Business Model: EPC

Investment: 110 Million USD

Progress:  Put into production in April, 2017

③Pakistan Wind Farm Ⅱ(2 * 49.5MW)

The Three Gorges Pakistan Wind Farm Ⅱ (2 * 49.5MW) is one of the 7 "Propulsive Projects" in CPEC Energy Cooperation. It is located at Jhampir of Thatta prefecture of Sindh in the south of Pakistan. The project class belongs to the wind farms which are Class III and above, boasting flat terrain, convenient transport, available power grid access and good wind resource. The construction of the project commenced on September 1, 2016 and would last for 18 months. It was developed under BOO model by China Three Gorges Group with an operation period of twenty years.

Project Profile

Location: 90km west of Karachi, the largest port and industrial city in Pakistan and 80km south of Arabian Coast

Installed Capacity: 49.5MW

Annual Power Output: 152.5 million kWh

Annual Availability: 3082 hours

Business Model: BOO

Investment: 112 million USD

Progress: under construction; COD in June 2018

④Jhimpir 99 MW Wind Power Project

Jhimpir 99 MW Wind Power Project is one of the 14 "Prioritized Projects" in CPEC Energy Cooperation. It is located in the wind resources corridor in Jhimpir District, Sindh Province, about 200km northeast in Karachi. The construction includes 66 WTG, substation and maintenance building. This wind power project is developed by the Orient Group under BOO model. During the APEC meeting in November 2014, Li Keqiang, the Premier of China, and Nawaz Sharif, the Prime Minister of Pakistan, witnessed the signing of the EPC framework agreement at the Great Hall of the People in Beijing. In March 2015, the project witnessed the financial close. In April 2015, Xi Jinping, the President of China, and Nawaz Sharif, the Prime Minister of Pakistan, witnessed the loan release ceremony and the live opening ceremony of the project.

Project Profile

Location: The Wind Corridor in Jhimpir District, Sindh Province, 200 km North East from Karachi

Installed Capacity: 99MW

Annual Power Output: 270.96 million kWh

Annual Availability: 2737 hours

Business Model: BOO

Investment: 252 million USD

Progress: under construction, COD in May, 2017

(2)PV Power Generation Projects

①Zonergy 900MW PV Power Generation Project

Zonergy 900MW PV power generation project is one of the 14 "Prioritized Projects" in CPEC Energy Cooperation. It is located in Jinnah Photovoltaic PV Industrial Park in Bhawalpur, Punjab Province, Pakistan, with a total area of 4,500 acres and a total installed capacity of 900MW. In April 2015, President Xi Jinping of China and Prime Minister Nawaz Sharif of Pakistan jointly   kicked off the commencement ceremony of the project. From then on, 50MW of the project was completed and connected to the grid in 90 days. On June 8th, 2016, the phase I of 300MW was connected to the grid. It is the first project to conclude financial closure and connect to the grid in CPEC energy projects.

Project Profile

Location: Quaid-E-Azam Solar Park, Cholistan Region, Bahawalpur, Punjab Province, Pakistan

Installed Capacity: 900MW

Annual Power Output: 1.3 billion kWh

Business Model: Direct investment

Investment: 1.5 billion USD

Progress: Currently the first phase of 300MW project has been completed and connected to grid.

(3)Coal-fired Power Plants Projects

①Sahiwal Coal-fired Power Plant Project

Sahiwal Power Plant Project is one of the 14 "Prioritized Projects" in CPEC Energy Projects cooperation. It's about 15km northeast from the city of Sahiwal in Punjab, about 160km from Lahore, the capital of Punjab, and adjacent to Karachi-Lahore railway and national highway. The project involves two 2*660MW supercritical coal-fired units, covering an area of about 405 hectares. The construction started on July 31, 2015, and two units will be put into operation by the end of June 2017. It was jointly invested by Huaneng Shandong Power Generation Co., Ltd and Shandong Ruyi Group, each holding 50% of the shares, and constructed under EPC model. Huaneng Shandong Power Generation Co., Ltd will be responsible for the operation for a period of 30 years.

Project Profile

Location: About 15km northeast from the city of Sahiwal in Punjab and about 160km from Lahore, the capital of Punjab

Installed Capacity: 1320MW

Annual Power Output: 9 billion kWh

Annual Availability: 6,200 hours

Business Model: BOOT

Investment: 1.8 billion USD

Progress: under construction and expected to be put into operation by June 30, 2017

②Coal-fired Emergency Power Plants at Port Qasim

The project of Coal-fired Emergency Power Plants at Port Qasim is one of the 14 "Prioritized Projects" in CPEC Energy Cooperation. It was commented by Pakistan Prime Minister Nawaz Sharif as the "No. 1 Project" among all the energy projects in the country. It is carried out under BOO model and is jointly invested and developed by Powerchina Resources Ltd., a subsidiary of Power Construction Corporation of China, and AMC, holdings by the Qatar Royal family, with the shareholding ratio of 51% to 49%. The investment agreement was signed in April 2015 under the witness of Chinese President Xi Jinping and Pakistan Prime Minister Nawaz Sharif. The official construction of the complex started in May and the financing closure and first loan ended in December.

Project Profile

Location: Port Qasim Industry Park, 37km southeast of Karachi, Sindh, neighboring the shoal of Arabian Sea

Installed Capacity: 1320MW

Annual Power Output: about 9 billion kWh

Annual Availability: 7,446 hours

Business Model: BOO

Investment: about 2.085 billion USD

Progress: under construction, the first unit is expected to synchronize by the end of December 2017 and the COD, by the end of June 2018

③Thar Coal Block Ⅱ Coal-Power Integrated Project

Thar Coal Block Ⅱ Coal-Power Integrated Project is one of the 14 "Prioritized Projects" in CPEC Energy Projects Cooperation. It is also the first coal-power integrated project of CPEC and in Pakistan. In November 2014 and April 2015, the state leaders of China and Pakistan witnessed the signing of the financing MOU and the Loan Terms of the project respectively. On April 13, 2016, the project achieved financial closure and commenced construction, which will last a period of 42 months. The project is jointly developed by CMEC and Engro Group and executed by CMEC.

Project Profile

Location: Thar coal field of Sindh, about 400km from Karachi

Installed Capacity: annual lignite production of 3.8 million tons; 660MW coal-fired power station

Annual Power Output: 4.472 billion kWh

Annual Availability: 7446 hours

Business Model: project financing (F+EPC)

Investment: 2 billion USD

Progress: under construction and expected to start coal production and power generation in September 2019

④CPHGC 2 x 660MW Coal-Fired Power Plant Project

CPHGC 2 x 660MW Coal-Fired Power Plant Project is one of the 7 "Propulsive Projects " in CPEC Energy Cooperation. It is the biggest local coal-fired power plant project, located in Lasbela, Balochistan, Pakistan, right next to the oil-fired power plant of Hub Power Company Limited. The project includes two sets of 660MW generating units with supercritical technology, auxiliary facilities and a dedicated coal jetty. The project was officially launched on March 21st, 2017 under the joint witness of the government authorities from China and Pakistan. The project is developed by China Power Hub Generation Company (Pvt.) Limited (CPHGC), a joint venture company formed by China Power International Holding Ltd (CPIH) and Hub Power Company Limited (HUBCO) in Pakistan, with the construction duration of three years and operation duration of thirty years

Project Profile

Location: 55km east of Karachi

Installed Capacity: 1320MW

Annual Power Capacity: 9 billion kWh

Annual Availability: 7,500 hours

Investment: Approx. 1.995 billion USD

Progress: Under construction and expected to be put into operation for power generation in August, 2019

(4)Hydropower Projects

①Karot Hydropower Station

The Karot Hydropower Station is one of the 14 "Prioritized Projects" in CPEC Energy Cooperation. The project is located on the trunk stream of Jhelum River in Pakistan and at the fourth cascade in the river's cascade planning. The project is not only the first hydropower project invested by Chinese sponsors listed in the joint statement by China and Pakistan, but also the first overseas hydropower project entirely adopted Chinese technology and standards. The construction of the project was commenced on April 20, 2015 under the witness of the leaders of the two countries and would be finished in five years. The project is developed with BOOT model by China Three Gorges Group with an operation duration of thirty years.

Project Profile

Location: 1km at upper stream of Karot Bridge of Punjab, 55km west to the Capital-Islamabad.

Installed Capacity: 720MW

Annual Power Output: 3.206billion kWh

Annual Availability: 4452 hours

Business Model: BOOT

Investment: 1.74 billion USD

Progress: under construction; COD in December 2021

5. Documents

Pak-China Free Trade Agreement in Good & Investment (On 24th November, 2006)

Pak-China Free Trade Agreement in Services (On 3rd December 2008)

Pak-China Early Harvest Programme (On 5th April 2005)

The Outline of the Long-term Plan on the China-Pakistan Economic Corridor and Cooperation (On November8, 2014)

(It’s arranged and compiled according to relevant materials.)

 

Editor: Yaling