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The following is the full text of the response of Sahiwal coal-fired power plant to a news item carried by Business Recorder recently:

Being the flagship project in CPEC Phase I, Sahiwal Coal-Fired Power Plant enjoys the largest single installed capacity, with the most advanced technology, the best environmental indicators, the fastest construction speed, and the earliest commercial operation, creating a national reputation of "Punjab Speed", recognized as "The miracle of Pakistan's electric power construction".

According to the spokesperson for Sahiwal coal-fired power plant, since its construction, Sahiwal Power Plant has always adhered to the concept of "green development for the benefit of the people", and won the Punjab Province "environmentally friendly award", and "Environmental Excellence Award of the Year" for fourth consecutive time, the "Outstanding Achievement Award" issued by then Prime Minister, and "Outstanding Contribution towards Shared Prosperity through CPEC."

"Previously, local residents suffered 6-7 hours of power cuts a day until 2017, when Sahiwal coal-fired power plant was built, and the average daily blackout was reduced by three hours," according to the spokesperson. The statistics shows that Sahiwal Power Plant is capable to generate 9 billion kilowatt-hours of electricity annually, which can meet the electricity consumption of 4 million local households. The average unit price of Sahiwal Power Plant is much lower than similar old power plants and end-unit price, which effectively reduced the overall cost of power generation in Pakistan, the spokesperson adds.

In addition, Sahiwal Power Plant has always adhered to the "localization" development strategy. The proportion of Pakistani staff has reached 76%. It invested more than 1 billion rupees to build a training school, which provides local youths with skills training free of charge, and cultivates a large number of practical technical talents for the local community. As an international enterprise, Sahiwal Power Plant regards fulfilling social responsibility as its mission. It has contributed 95 million rupees to build concrete roads and bridges, donated in various aspects. These actions have significantly deepened the hardcore friendship between Chinese and Pakistani people.

Despite the top technology and advanced equipment, the production and operation of Sahiwal Power Plant is not all smooth sailing. Especially in early 2022, the sudden outbreak of the Russian-Ukrainian war led to soaring global energy prices, the FOB price of South African imported coalon which it relies to maintain production skyrocketed to seven times its lowest point. Facing this challenge, Sahiwal Power Plant took the initiative to seek opportunities in the crisis and was the first to try to use rupees to purchase Afghan coal, which effectively guaranteed the fuel supply and power output, not only significantly reduced the purchase price of coal, but also saved a large amount of foreign exchange for Pakistan. For this reason, the Ministry of Energy, NEPRA and other relevant departments have repeatedly recognized Sahiwal Power Plant's efforts to actively explore fuel supply channels.

Since August 2022, all the coal consumed in Sahiwal Power Plant has been settled in rupees, including spot market coal and long-term contract coal, and all of them have adopted the open bidding method, adhering to the principle of "lowest price wins". Regarding the bidding procedure, Sahiwal Power Plant strictly implements NEPRA regulations and selects qualified suppliers through open bidding, which is the most open, transparent and fair bidding method known to the industry, with measures such as advanced publication of bidding notices in local newspapers, sealed bids, and video-recorded bid opening processes supervised by all bidders onsite, thereby eliminating any possibility of manipulation by interested parties..

Concerning the procurement price of coal, for spot coal purchased in rupees, Sahiwal Power Plant adheres rigorously to the NEPRA Guidelines, employing a policy of "lowest price wins the bid." It is crucial to note that the procurement price of spot coal has consistently remained below the internationally recognized South African Coal API4 Index. As for the procurement of long-term contract coal in rupees, the pricing of the recent long-term coal contract of Sahiwal Power Plant was notably below the API4 index spread after Differential, thereby ensuring significant benefits for Pakistan's electricity consumers.

Meanwhile, according to the newspaper report, Sahiwal Power Plant is facing a number of long-term pending difficulties and challenges, such as overdue payment, difficulty of exchanging foreign currency, capacity payment deduction, royalty charge of dedicated jetty that cannot be passed through, while having no return for shareholder after 6 years of commercial operation.

The Plant regrets to find the recent report on the latter issue, its spokesperson says and adds that “with the briefing and illustration given above, there is no reason for us to be questioned. Instead, relevant authority should divert more attention to address problems faced by the Power plant”.

However, when talking about the future, the spokesperson says is optimistic. Pakistan is extensively engaged in tackling the infrastructure and industrial development hurdles faced by the nation, alongside navigating the pursuit of a sustainable strategy to bolster industrialization and uplift the living standards of people. At this pivotal juncture, a thorough and impartial evaluation of the Sahiwal Power Plant's historical significance and contributions, coupled with an objective analysis of our stance and methodology concerning this foreign-invested endeavor, could provide significant insights for the planning of CPEC II and the future economic advancement of Pakistan.

Copyright Business Recorder, 2024


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