China has committed $6.5 billion to finance the construction of a major nuclear power project in Pakistan’s port city of Karachias it seeks to strengthen ties with its strategic partner, Pakistani officials said.
Pakistani Prime Minister Nawaz Sharif broke ground on the $9.59 billion project last month but officials have provided few details of how they plan to finance it.
Financing documents seen by Reuters showedChina National Nuclear Cooperation (CNNC) has promised to grant a loan of at least $6.5 billion to finance the project which will have two reactors with a capacity of 1,100 megawatts each.
Two members of the government’s energy team and three sources close to the deal confirmed this. CNNC was not available for comment.
“China has complete confidence in Pakistan’s capacity to run a nuclear power plant with all checks in place,” said Ansar Parvez, chairman of the Pakistan atomic energy commission which runs the civilian nuclear programme.
“As things stand, the performance and capacity of nuclear power plants in Pakistan is far better compared to non-nuclear plants.”
Parvez declined to give more details of the funding but said it would be completed by 2019 and each of the two reactors would be larger than the combined power of all nuclear reactors now operating in Pakistan.
As part of the deal, China has also waived a $250,000 insurance premium on the loan, said two sources in the Energy Ministry with knowledge of the project. They declined to be identified as they are not authorised to speak to the media about the financing.
Pakistan and China, both nuclear-armed nations, consider each other close friends and their ties have been underpinned by common wariness of India and a desire to hedge against US influence in South Asia.
Pakistan sees nuclear energy as key to its efforts to solve power shortages that have crippled its economy. Pakistan generates about 11,000 MW of power while total demand is about 15,000MW.
Blackouts lasting more than half a day in some areas have infuriated many Pakistanis and sparked violent protests, undermining an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.
Under its long-term energy plan, Pakistan hopes to produce more than 40,000 MW of electricity through nuclear plants by 2050.
The United States sealed a nuclear supply deal with India in 2008, irking both China and Pakistan.
Pakistan wants a similar agreement with the United States but it is reluctant, largely because Pakistani nuclear scientist Abdul Qadeer Khan admitted in 2004 to transferring nuclear secrets to North Korea, Iran and Iraq.
“There should be no double standards in terms of civilian nuclear deals,” Parvez said. “Pakistan has energy needs and the building of two new reactors should convince everyone that international embargos and restrictions and Indian lobbying won’t stop us.”
