Sahiwal power station

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Sahiwal power station is a 1,320-megawatt (MW) coal plant in Punjab province, Pakistan.

Location

The map below shows the location of the plant in Sahiwal district, Punjab province.

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Background

In November 2013, the Punjab government and China Western Power Company signed a memorandum of understanding (MoU) to set up two 660 MW coal plants in Sahiwal. The projects would be completed in two and a half years and China Western Power Company would contribute about US$1.5 billion to the projects.

On May 30, 2014, Prime Minister Nawaz Sharif attended a ground breaking ceremony for the project.

According to a February 2015 report, the Sahiwal project was "in doldrums" due to lack of interest from potential investors. The project received a letter of support from the Pakistan Private Power and Infrastructure Board on April 17, 2015.

In December 2022, electricity production at Pakistan's three power stations operating on imported coal (Sahiwal power station, Port Qasim EPC power station and Hubco power station) fell to a five-year low. The slump was due to high prices; quality coal was averaging $253.83 per ton in 2022, compared to $114.24 per ton in 2021 and $59.91 per ton in 2020.

Project included in China-Pakistan Economic Corridor

In April 2015, it was announced that Sahiwal power station was among the projects included in the China-Pakistan Economic Corridor (CPEC). According to the announcement, the plant would be developed under the sponsorship of Industrial and Commercial Bank of China Limited, Huaneng Shandong Electricity Limited, and Shandong Ruyi Group. China Western Power Company, which in 2013 was identified as the sponsor, was not mentioned in the facility agreement. Huaneng is one of China's leading state-owned utilities. Shandong Ruyi Group is a textile company.

Legal challenge

In October 2015, the Lahore High Court imposed a stay on the development of the plant in response to legal action by two dozen residents and farmers. The legal action argued the proposed project would adversely affect some of Pakistan’s best agricultural land as well as the health of people and nearby industry. They also argued that the environmental assessment report on the project had been done hastily and contained errors, and that the plant would breach air pollution standards. The court has directed a further hearing on the project.

In January 2016, the Lahore High Court accepted assurances by the Punjab Government that environmental standards at the plant would be enforced, dismissing the legal challenge against the plant.

Revitalization and construction

In July 2015, a consortium consisting of China Huaneng and Shandong Ruyi Group announced that it had taken over the project, with Huaneng Shandong's President assuring Chief Minister Shahbaz Sharif that the project would be completed on schedule and would start producing electricity in 2017. At that time, orders had been given for the purchase of turbines, generators, and boilers, all of which would reach the project site ahead of schedule.

Construction began in June 2015. In May 2016, construction was well underway, with completion expected by December 2017. The project would be the first CPEC project to be completed.

Unit 1 went online in May 2017. Unit 2 was completed in June 2017 and began operation in July 2017. There's a 30-year PPA agreement with CPPA-G (guaranteed off-take). The Implementation Agreement provides sovereign guarantee, given adherence to agreed performance benchmarks (Availability: 85%, Efficiency: 39.75%). Shandong Huatai Electric Operations & Maintenance (Private) Limited is appointed as the O&M operator for the plant. The plant operates on imported coal which is sourced through China Huaneng Group Fuel Company Ltd under the Coal Supply Contract.

Post commissioning updates

In June 2019, it was reported that the 1,320 MW coal plant was on the brink of closure after the government was unable to pay the US$127 million of charges it owed the developer, China Huaneng Group.

In 2020 and 2021, articles claimed that the so-called "eco-friendly" project had "changed local people's negative impression about thermal power plants." These appear to be views pushed in the media by the company, including the director of the Corporate Culture Department for operator Huaneng Shandong Ruyi Energy.

In January 2021, Asia Times disclosed that Huaneng Shandong Ruyi Energy had inflated the plant's set-up costs. A committee found overpayments of 483.64 billion Pakistani rupees (US$3 billion) to several companies over the course of three years.

A 2021 State of Industry report listed the plant as the only "achieved" project in the period of interest. As of June 2021, the power station was running at fully capacity. A 2022 State of Industry report states that the plant generated 6881 GWh in the year ending June 2022, and 7342 GWh in the year ending June 2021.

Financing

In February 2017, financing for the project was closed. A US$1.44 billion loan was provided by ICBC. US$360 million in equity was provided by Huaneng Power International and Shandong Ruyi Technology Group.

As of July 2022, the company has successfully repaid 27% of its project debt ($ 1,44bn) obtained from Chinese lenders with the consortium led by Industrial and Commercial Bank of China (ICBC).

Project Details

• Owner: Huaneng Shandong Ruyi (Pakistan) Energy
• Parent company: China Huaneng Group and Shandong Ruyi Group
• Location: Sahiwal district, Punjab province, Pakistan
• Coordinates: 30.71422, 73.23802 (exact)
• Status: Operating
• Gross Capacity: 1,320 MW (Units 1 & 2: 660 MW)
• Type: Supercritical
• Start date: 2017
• Coal Type: Bituminous
• Coal Source: Imported
• Source of financing: US$1.44 billion in debt from ICBC; US$360 million in equity from Huaneng Power International and Shandong Ruyi Technology Group

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