The future of the 300MW Gwadar coal power plant, a key project under the China-Pakistan Economic Corridor (CPEC), is increasingly uncertain. Energy Minister Awais Khan Leghari has indicated that this project, among others totaling 10,000MW, may be scrapped due to affordability concerns for consumers.
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The Gwadar plant has faced significant delays since its initial tariff determination in 2018. Challenges include the COVID-19 pandemic, Pakistan’s foreign exchange issues, a slowdown in CPEC projects, and debates over shifting the plant’s fuel source from imported coal to Thar coal or even replacing it with a solar facility. Despite these discussions, the Chinese developer has insisted on adhering to the original plan of using imported coal.
In May 2024, the National Electric Power Regulatory Authority (Nepra) approved a 51% increase in the project’s cost, raising it to $444.49 million from the originally determined $292.77 million. This adjustment reflects significant rises in engineering, procurement, and construction costs, as well as increased insurance and interest rates. Additionally, the exchange rate reference was updated from Rs105 to Rs278.5 per dollar, and the 30-year levelized tariff nearly quadrupled from Rs6.96 per kWh to Rs25.99 (9.3 cents).
Minister Leghari has stated that only projects with 40% to 50% physical progress or those that have achieved financial closure will proceed. He emphasized that future energy contracts will prioritize cost-effectiveness, with competitive bidding determining project selection and private investors assuming associated risks.
Given these developments, the Gwadar coal power plant’s continuation appears doubtful, especially considering the consistent delays and escalating costs that have rendered it increasingly unaffordable.
