Energy-hungry Pakistan has approved a $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 today.
The federal cabinet, in its last meeting, ratified the agreement whereby China is expected to provide 82% of the total financing of $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% 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 1%, management fee of 0.2% and commitment fee of 0.2%.
The "second loan preferential buyer credit agreement" will allow Pakistan to get a billion dollars at an annual interest rate of 2%, management fee of 0.2% and commitment fee also of 0.2%.
The third phase will enable Pakistan to obtain buyers credit worth 474 million dollars with an annual interest rate of 6%, management fee of 0.75%, commitment fee of 0.5% and insurance at 7%.
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 saying.
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.
