A consortium led by China Machinery Engineering Corp is set to finance a coal-based power plant and a mining project being developed by Engro Corp, a Pakistani firm.
The first phase of the $2 billion project will consist of a coal-based power plant with two 330 MW units in Thar Block II in the Sindh province of Pakistan and a coal mining project for power generation.
The project is also part of the cooperation under the China-Pakistan Economic Corridor (CPEC) project, CMEC said in a statement.
Zhang Chun, president of CMEC, said that it is the first integration project of coal mining and coal-based power plant among the projects in the CPEC, which is expected to push forward the economic development in Pakistan.
“I think we have opened a new chapter in the overseas market with this project,” Zhang said.
“Since our strength lies in foreign engineering project contracting, it will become a model project in Pakistan.”
According to China Daily, the deal follows President Xi Jinping’s state visit to Pakistan in April, when the two sides agreed to set up an economic corridor to bolster China’s new trade initiatives – the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
Wang Shida, an expert on Afghanistan at the Beijing-based China Institute of Contemporary International Relations, said that the project will help bolster Pakistan’s energy supplies, something that has hindered local economic development.
He said that Pakistan relies heavily on imported crude oil, diesel and natural gas, with less than 0.1 per cent of energy coming from coal-fired power stations, leaving a lot of potential for growth in coal-based power projects.
“The cost is very high due to the reliance on imports. Construction of more coal-powered plants will ease the demand-supply gap in Pakistan,” he said.
China has already announced to invest more than $40 billion for CPEC with energy projects being a major focus including hydropower plants, coal-fired stations and wind farms.
The signing ceremony for the project also involved financial groups like China Development Bank and Habib Bank Ltd in Pakistan.