Islamabad: After Pakistan’s Finance Ministry refused to provide a sovereign guarantee, the fifth unit of the Chashma Nuclear Power Generating Station, C5, hit a snag, Dawn reported citing sources.
The Chinese government has said that they have agreed to provide finance for up to 85 percent of the USD 3.7 billion nuclear power plant project, subject to the sovereign guarantee.
The sovereign guarantee is referred to assuring the creditor that the government will satisfy the obligation if the primary obligor defaults on the loan payments and here Pakistan Atomic Energy Commission (PAEC) is one.
The loan program of the International Monetary Fund (IMF) seems to have tied the government’s hands with regard to the sovereign guarantee. As part of the 2022-23 budget, the government has laid before the National Assembly a Statement of Contingent Liabilities, reported Dawn.
The list contains all guarantees expected to be issued during the fiscal year. The government is treating it as a ceiling to contain fiscal risks and safeguard the public debt trajectory.
The PAEC has been running four nuclear power units based on Chinese technology near Chashma, Punjab. With a nameplate capacity of 325MW each, C-1 and C-2 started operations in 2000 and 2011, respectively. C-3 and C-4 became operational in 2016 and 2017, respectively, and have a gross capacity of 340MW each.
Separately, PAEC established Karachi Nuclear Power Plant Unit-2 and Unit-3 at Paradise Point, once a popular public beach on the outskirts of Karachi. The two units have a nameplate capacity of 1,100MW each. K-2 and K-3 started generating electricity in 2021 and 2022, respectively, according to Dawn.
On Monday, the IMF team reached Pakistan for the ninth review under the USD 7 billion Extended Fund Facility (EFF), reported Geo News.
Finance Minister Ishaq Dar received IMF mission chief Nathen Porter and both sides are holding the toughest ever parleys for making renewed efforts to accomplish the pending ninth review under the USD 7 billion EFF.
The IMF visit to Pakistan scheduled for October has been delayed amidst differences between Pakistan’s commitment to the IMF on fiscal consolidation.
“Pakistan and the global lender continued talks virtually but differences still persisted over tax collection targets, and non-starter energy reforms including hiking of gas tariff, rising circular debt, and expenditure overrun, making consensus harder to strike on a staff-level agreement for completion of the review,” according to the Financial Post report.
The News International had reported that the government is expected to share its plan with the visiting review mission for taking additional taxation measures.
The discussion will revolve around Pakistan’s plan for taking additional taxation measures to fetch over Rs 200 billion through a presidential ordinance, rationalizing expenditure, and hiking both electricity and gas tariffs for erasing the monster of the circular debt.
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