Islamabad: Energy-hungry Pakistan has
approved a USD 1.91 billion inter-governmental framework
agreement with its all-weather ally China for financing two
new nuclear power plants, a media report said here on Tuesday.
The federal cabinet, in its last meeting, ratified the
agreement whereby China is expected to provide 82 per cent of
the total financing of USD 1.91 billion to Pakistan as a soft
loan for 20 years, with an eight-year grace period.
The decision comes close on the heels of the US
virtually rejecting Pakistan`s demand for a nuclear deal
similar to the one Washington has with India. However, the US
has signed an agreement with Pakistan to revamp three thermal
power plants to meet its growing energy needs.
The agreement is for two nuclear power plants of 320
MW each to be built by the Pakistan Atomic Energy Commission
and China`s Zongyuan Engineering Corporation at the Chashma
site in Punjab province.
China`s Eximbank will provide 82 per cent of the
financing for the two plants and the Pakistan government will
arrange the remaining 18 per cent, the Dawn newspaper quoted
its sources as saying.
The inter-governmental framework agreement has loan
facility in three phases. The first phase will amount to 104
million dollars with an annual interest rate of one per cent,
management fee of 0.2 per cent and commitment fee of 0.2 pct.
The "second loan preferential buyer credit agreement"
will allow Pakistan to get a billion dollars at an annual
interest rate of 2 per cent, management fee of 0.2 per cent
and commitment fee also of 0.2pc.
The third phase will enable Pakistan to obtain buyers
credit worth 474 million dollars with an annual interest rate
of 6 per cent, management fee of 0.75 per cent, commitment fee
of 0.5 per cent and insurance at 7 per cent.
The pact also provides that annual composite interest
rate will not increase over three per cent in any case.
The two new plants are being built to overcome
Pakistan`s growing power shortfall and the Executive Committee
of the National Economic Council has already approved these
projects, sources in the Planning Commission were quoted as
Each plant will comprise a nuclear steam supply system
(NSSS), a turbine generator set and associated auxiliary
equipment and installations.
The NSSS consists of a reactor and two coolant loops
connected in parallel to the reactor vessel. Each loop
consists of a reactor coolant pump and steam generator.
The design of the Chashma-3 and Chashma-4 units is
similar to the design of the Chashma-2, which is currently
being built and is expected to be ready by next year.
Chashma-2`s design is an improved version of Chashma-1.
These improvements are based on feedback from
Chashma-1 and safety enhancements to meet the requirements of
the Pakistan Nuclear Regulatory Authority. The Chashma-1
nuclear plant, which produces 300 MW, has been in commercial
operation since 2000.