Pakistan in ‘civil nuclear deal’ with China

[Neo]

Pakistan in ‘civil nuclear deal’ with China

* Two plants with a capacity of 640 megawatts to be set up in Chashma
* China to provide 82% of total $1.912bn financing

By Sajid Chaudhry

ISLAMABAD: Pakistan has entered a civil nuclear deal with China for the establishment of two nuclear power projects of 640 megawatts in Chashma, Daily Times has learnt.

The breakthrough deal – under which Pakistan would be provided a loan, technology and installation facilities – was finalised ahead of the latest round of the Pak-US strategic dialogue, as the federal cabinet granted financial approval at a meeting on March 24.

Sources privy to the deal said the federal cabinet had approved an inter-government framework agreement on the financing of ‘Chashma Nuclear Power Project 3’ and ‘Chashma Nuclear Power Project 4’ with China.

The sources said under the agreement, China would provide 82 percent of the total $1.912 billion financing to Pakistan as a 20-year soft loan, with an eight-year grace period.

In a bid to guarantee financing for the two plants, the inter-government framework agreement requires both countries to enter three loan agreements. Under the first loan agreement, Pakistan would be provided $104 million with an annual interest rate of 1 percent, management fee of 0.2 percent and a commitment fee of 0.2 percent. Under the second preferential buyer credit agreement, Pakistan would get $1 billion with an annual interest rate of 2 percent, a management fee of 0.2 percent and a commitment fee of 0.2 percent – while the third buyers credit agreement would provide Pakistan $474 million with an annual interest rate of 6 percent, a management fee of 0.75 percent, a commitment fee of 0.5 percent and an insurance rate of 7 percent.

However, according to the inter-government framework agreement, the annual composite interest rate would not exceed three percent in any case.

The sources said that frequent visits by President Asif Ali Zardar and Prime Minister Yousaf Raza Gilani helped secure the deal. They said the Executive Committee of the National Economic Council (ECNEC) had already approved the two projects.

The Pakistan Atomic Energy Commission would be the executing agency for the establishment of the two plants – which would be completed in eight years.

The sources said each 320-megawatt unit would contain a nuclear steam supply system, a turbine-generator set and the associated auxiliary equipment and installations.

http://www.dailytimes.com.pk/default...0-3-2010_pg7_2

[Neo]

Chashma 3 & 4 nuclear plants financing: Cabinet to ratify IGFA signed with China

ISLAMABAD (March 24 2010): The Cabinet, scheduled to meet on Wednesday, is set to ratify Inter-Governmental Framework Agreement (IGFA), signed with China for concessional financing pertaining to, Business Recorder has learnt. Following lukewarm response from the United States on provision of civil nuclear technology, China has formally offered Pakistan two nuclear power plants with power generation capacity of 300 megawatt--Chashma-3 and Chashma-4.

According to sources, total cost of the two nuclear power plants has been estimated at Rs 189.918 billion, and Pakistan requires Rs 139.7 billion foreign assistance to finance these projects. The government has already allocated Rs 4.55 billion in Public Sector Development Programme (PSDP) for the current financial year.

These projects will be completed in eight years. Pak-China Technical Working Group (TWG) had met on July 22- 24, 2009 in Islamabad to finalise the list of projects to be financed by China. Beijing had included these two nuclear power plants in its financial year development programme (FYDP) 2009-10, agreed between the two countries.

According to the agenda of the Cabinet, the report on the status of implementation of Cabinet decisions taken during the period March 25, 2008 to February 28, 2010 will be presented before the Cabinet. The apex body will also review the decisions taken by Economic Co-ordination Committee (ECC) of the Cabinet in its meeting held on March 9, 2010.

The Cabinet may accord approval, in principle, to the Draft MoU between the governments of Iraq and Pakistan for Training Co-operation. Approval for signing of Inter-Governmental Framework Agreement with China for Concessional Financing will also be sought for procurement/installation of non-intrusive vehicle x-ray inspection system.

Other items on the agenda of the Cabinet are: (i) Ratification of (1) International Convention on Civil and Political Rights (ICCPR) and (2) Convention Against torture and other cruel, inhuman or degrading treatment or punishment (CAT); (ii) Approval, in principle, to enter into negotiations with Spain on an agreement on transfer of sentenced persons; (iii) Ex post facto approval, in principle, of the Cabinet to start negotiation on an MoU with South Asia Co-operative Environment Programme (SACEP) on Regional Oil and Chemical Pollution Contingency Plan; (iv) Ex post facto approval of the Cabinet to the MoU between Alternative Energy Development Board (AEDB) and two Chinese Solar Energy Companies; (v) Determination of Upfront Tariff for co-generation projects by Sugar industry; (vi) Approval of the Cabinet to the Bill to provide for the Establishment of National University of Law and Social Sciences at Islamabad; (vii) Management and Repatriation Strategy/Policy for Afghan Refugees in Pakistan (2010-2012); and (viii) Presentation on Public Procurement Regulatory Authority (PPRA) Report 2002-2008.

http://www.brecorder.com/index.php?i...term=&supDate=

[Araz]

This is the way to go.When pakistan bought the first reactor from China, iyt had not even been installed in China . So the risk has proven to be a sound investment , and Pakistan has gone for more.I dont think French or other reactors will be coming Pakistan's way any time soon and our needs are now.
Araz

[Neo]

China Signs Power Plant Deals With Pakistan

China has agreed to build several power plants in Pakistan to help the South Asian nation deal with its worsening electricity crisis. When completed over the next several years, these plants, including Nandipur (425 MW, Thermal), Guddu(800 MW, Thermal) and Neelam-Jhelum(1000 MW, Hydro), Chashma (1200 MW, Nuclear) will add more than 3000 MW of power generating capacity for the energy-hungry country. Pakistan is currently facing a deficit of 4,000 to 5,000 megawatts, resulting in extensive load-shedding (rolling blackouts) of several hours a day.

China has already installed a 325-megawatt nuclear power plant (C1) at Chashma and is currently working on another (C2) of the same capacity that is expected to be online by 2010. The agreements for C3 and C4 have also been signed. The United States has objected to China supplying C3 and C4 on the grounds that any Pak-China nuclear cooperation would require consensus approval by the NSG, of which China is now a member, for any exception to the guidelines. The US is applying double standards since it supported and got approval for such an exception from NSG for its own nuclear deal with India.

Under another agreement, China has agreed to invest about $600 million for setting up an integrated coal mining-cum-power project in Sindh. The project will produce 180 million tons of coal per year, which is sufficient to fuel the proposed 405 MW power plant. Pakistan is currently world's seventh largest coal-producing country, with coal reserves of more than 185 billion tons (second in the world after U.S.A.'s 247 billion tons). Almost all (99 percent) of Pakistan's coal reserves are found in the province of Sindh. Pakistan's largest coal field is Thar coal field which is spread over an area of 9100 square kilometers, and contains 175 billion tons of coal. So far this coal field has not been developed but efforts are underway.

The Export-Import Bank of China will lead the multi-national bank financing and China Export and Credit Insurance Corporation (Sinosure) will provide political risk and credit default insurance for the first 425 MW project at Nanipur, Gujranwala estimated to cost $329m, according to Associated Press of Pakistan. Other participating banks include BNP-Paribas, HSBC Bank plc, and CIC France. The lead contractor is China's Dongfang Electric Corporation Limited, with G.E. France as a sub-contractor.

Political risk has been rising in many developing nations, including the South Asian nations of Bangladesh, India, Pakistan and Sri Lanka (see 2008 political risk map). The cost of insurance against political and economic risk has also been going up, as the global economic crisis unfolds. Hong Kong-based Political & Economic Risk Consultancy Ltd. has recently rated India as the riskiest of 14 Asian countries, not including Pakistan and Afghanistan, it analyzed for 2009.

With their national coffers bulging and their exports driven economy slowing, the Chinese see opportunity in the developing world where others see political and economic risks. It is an opportunity for China to assure the continuing availability of raw materials and oil for its growing industries and to diversify its export markets. In addition to helping bail out the ailing US economy, China is using some of its vast cash reserves of $2 trillion to offer supplier financing as well as insurance for the non-Chinese partners to cover political and credit risk in the emerging markets. With bilateral trade volume of about $7 billion, Pakistan is only one example of Chinese interest. Others include politically-risky Afghanistan, and many nations of Sub-Saharan Africa where the Chinese are financing and building major infrastructure projects. In Afghanistan, China has committed nearly $2.9 billion to develop the Aynak copper field, including the infrastructure that must be built with it such as a power station to run the operation and a railroad to haul the tons of copper it hopes to extract. The Aynak project is the biggest foreign investment in Afghanistan to date, according to Reuters. The trade between Africa and China has grown an average of 30% in the past decade, topping $106 billion last year.

Looking at how the Chinese are working with many developing nations in Asia and Africa, it appears to be an unwritten Chinese policy to offer trade and investment in projects rather than direct cash aid. Given the rampant government corruption in many developing nations, including Pakistan, the Chinese policy is a sound one. It attempts to benefit the people and the nation more than the corrupt politicians and government officials who they must deal with.

In terms of Chinese dominance in power infrastructure development, one only needs to look at the heavy Chinese presence in the Indian power sector development. According to the Wall Street Journal, Chinese companies are now supplying equipment for about 25% of the new power capacity India is adding to its grid, up from almost nothing a few years ago. They have sent thousands of skilled workers to Indian plant sites, some of which boast Chinese chefs, Chinese television and ping pong.

Clearly, the Chinese objectives are not entirely altruistic. Their strategy is driven by enlightened self-interest in the developing world, which they see as source of commodities that their industries need as well as growing export market for their products and services. But the Chinese want to do good and do well at the same time by helping to lift people out of poverty in the developing world. By doing so, they want to be seen as friends and partners by the people in Asia, Africa and Latin America. The strategy enhances China's status as the new superpower that takes its global leadership role seriously.

http://www.riazhaq.com/2009/03/china...eals-with.html

[Neo]

And some people still question the true nature of our "all weather friend".

[Neo]

Pakistan in ‘civil nuclear deal’ with China

* Two plants with a capacity of 640 megawatts to be set up in Chashma
* China to provide 82% of total $1.912bn financing

By Sajid Chaudhry
Daily Times

ISLAMABAD: Pakistan has entered a civil nuclear deal with China for the establishment of two nuclear power projects of 640 megawatts in Chashma, Daily Times has learnt.

The breakthrough deal – under which Pakistan would be provided a loan, technology and installation facilities – was finalised ahead of the latest round of the Pak-US strategic dialogue, as the federal cabinet granted financial approval at a meeting on March 24.

Sources privy to the deal said the federal cabinet had approved an inter-government framework agreement on the financing of ‘Chashma Nuclear Power Project 3’ and ‘Chashma Nuclear Power Project 4’ with China.

The sources said under the agreement, China would provide 82 percent of the total $1.912 billion financing to Pakistan as a 20-year soft loan, with an eight-year grace period.

In a bid to guarantee financing for the two plants, the inter-government framework agreement requires both countries to enter three loan agreements. Under the first loan agreement, Pakistan would be provided $104 million with an annual interest rate of 1 percent, management fee of 0.2 percent and a commitment fee of 0.2 percent. Under the second preferential buyer credit agreement, Pakistan would get $1 billion with an annual interest rate of 2 percent, a management fee of 0.2 percent and a commitment fee of 0.2 percent – while the third buyers credit agreement would provide Pakistan $474 million with an annual interest rate of 6 percent, a management fee of 0.75 percent, a commitment fee of 0.5 percent and an insurance rate of 7 percent.
However, according to the inter-government framework agreement, the annual composite interest rate would not exceed three percent in any case.

The sources said that frequent visits by President Asif Ali Zardar and Prime Minister Yousaf Raza Gilani helped secure the deal. They said the Executive Committee of the National Economic Council (ECNEC) had already approved the two projects.

The Pakistan Atomic Energy Commission would be the executing agency for the establishment of the two plants – which would be completed in eight years.

The sources said each 320-megawatt unit would contain a nuclear steam supply system, a turbine-generator set and the associated auxiliary equipment and installations.

http://thepakistaninewspaper.com/new...l.php?id=16412

[Zaki]

I still did not understand how can China offer us a civil nuclear deal without seeking permission from NSG (Nuclear Suppliers Group)

Could anybody explain?

[Mastankhan]

Hi,

It is a civil nuclear deal---there is no issue about that---. Only time there would be a problem----when it is for millitary purposes. That is what my take is on it.

[vinod2070]

Originally Posted by Neo

And some people still question the true nature of our "all weather friend".

So selling power plants with supplier financing means "all weather friendship"?

Its all in the eyes of the beholder. Friendship is among equals as the cliche goes.

It is up to you to decide if you are their equal or if you share their worldview or their ideology or anything at all except serving their interests in the region and serving as the market for their weapons and their goods.

To me, this quote by a Pakistani writer seems ever so relevant:

As I look around, I see many signs of a country that has grown older, but has failed to grow up. For one, we remain too immature as a nation to reflect on where we have gone wrong, and what needs to be done to set matters right. We live from one day to the next, confident in the expectation that generous adults will look after us, no matter what transgressions we commit.

Most of you look at China as some kind of guardian uncle that will always save you from yourself. A strange kind of deference to China that has no parallel, even on forums none of you have the courage to take on an individual Chinese for the most part as if that will result in China breaking the relationship!

You bend over backwards trying to remain silent on the treatment of Uighurs (even when they are not allowed to even go to the mosques). However issues like burqa ban in France in public places invite charges of Islamophobia from you.

Just know that even the USA-UK was not a relationship of equals. UK was considered a poodle of USA despite all talk of the special relationship. You are more or less a client state, no more.