The coal power plant in Gwadar, the main axis of the China-Pakistan Economic Corridor (CPEC), has been in a limbo for years. The 300 MW project was built to meet the energy needs of the region and promote industrial development in the coastal city but its objectives were never achieved.

The decision to set up a power plant using imported coal in Gwadar was made in 2016, the federal government had issued a letter of support (permit) to a Chinese company in August 2019 for the project.

Under this permit, it was decided that for the start of the work, the company would finalise all its financial matters, including electricity tariffs, bank loans, land and environmental permits etc by April 2020.

The official launch ceremony of the project was held in the first week of November 2019, attended by the then Federal Minister for Planning Khusro Bakhtiar and Vice Chairman of the Chinese National Development and Reform Commission Ning Jizhe.

However, delays in approving an acceptable tariff from National Electric Power Regulatory Authority (Nepra), reluctance by banks to provide loans, land lease and environmental clearance issues, along with the Chinese company’s unclear strategy, continued to push the project back.

The Private Power and Infrastructure Board (PPIB) extended the project’s launch deadline six times, the financial closing was also postponed several times, but the government stopped further extensions of the letter of support due to the company’s non-payment of fees. As a result, the Gwadar Coal Power Plant, which was then included in the list of flagship and fast-track projects of the CPEC, could not be built. The project has become the worst example of mismanagement and conflicting government policy.

Disruption issues of Iranian electricity in Gwadar

The federal government had also announced in 2022 to convert the Gwadar Coal-Fired Power Plant into a 300MW solar project but no progress was made on this matter either.

In December 2023, the company submitted a request for a third time to review the tariff of the proposed plant. The repeated increases in the tariff and the company’s objections made the situation more complicated.

The tariff for this power plant, which was set at Rs8.92 per unit/kWh in 2018, increased to more than Rs22 (9.08 cents) in 2024.
The problem is not limited to mismanagement or tariffs alone, but the initial cost of the project, which was estimated at $283 million, has also increased to about $444 million.

Now, the new expected commercial operation date of this coal plant is being given as December 2029, and the company has sought an extension in its letter of support (permit) till 2028, blaming the government for the delay.

Federal Energy Minister Owais Leghari has already made it clear that only those projects that are 40 to 50 percent complete or have achieved financial close will be taken forward. This situation has already put the future of Gwadar Coal Power in jeopardy.

On the other hand, Gwadar has been dependent on electricity imported from Iran for years, which is often interrupted.

Gwadar resident Mahir Baloch complains that the construction of a power plant was announced in the city but it never became a reality. Now the electricity supply remains disrupted for hours, plunging the entire area into darkness, he bemoans.

“The first energy project in the country under the CPEC should have been set up in Gwadar but it did not happen. Our region is a great port for the world, but we are facing the issue of uncertain electricity supply here,” laments Mahir.

Mismanagement and policy contradictions 

The world is currently rapidly moving towards clean energy. Pakistan has been repeating this promise in international conventions (COP etc) and meetings that it will increase its reliance on renewable or green energy. But it is following a completely opposite policy of generating electricity from coal. Plants running on imported coal like the proposed Gwadar Coal Power Plant not only put the pressure on foreign exchange reserves but also increase carbon emissions. This not only deepens the effects of climate change, but also exposes the contradictions of the country’s energy policy.

Figures provided by energy analyst Zainab Babar show that the cost of health losses alone from coal-fired power is about USD 15.98 per megawatt-hour (MWh). The estimated external impact of the Sahiwal Coal Plant is Rs18,271 per MWh, while the loss of Engro Power reaches Rs40,392 per megawatt hour. 

Coal power plants in Pakistan contribute about 27% of the country’s total carbon dioxide emissions. Of these, the Sahiwal plant’s emissions are 887 kg per MWh and the Engro plant’s emissions are 2,154 kg per MWh. Research studies have also shown that elements such as arsenic, lead, cadmium and mercury emitted from coal combustion pollute the soil, water and air, affecting water sources and agricultural land.

Research studies near the Sahiwal Coal Power Plant found that there has been an increase in skin, respiratory and eye diseases. The groundwater table has dropped by about 15 feet, which may be the result of excessive water use at the plant. 

Policy conflict and funding risk 

Research shows that coal projects in Thar have severely damaged the local ecosystem, leading to an increase in cancer, heart and respiratory diseases among residents of nearby areas.

It should be noted that around 1 million premature deaths occur annually in the world due to toxic substances emitted from the burning of fossil fuels, including coal.

According to a case study conducted by the Boston University’s Global Development Policy Centre, more than 400,000 people in nearby areas have been affected by air pollution from the Coal-fired Port Qasim Plant.

Energy experts and policy analysts in Pakistan have repeatedly warned that the “hidden social and environmental costs” of generating electricity from coal far outweigh the apparent costs. This includes serious health impacts, air pollution, transportation expenses and natural resource destruction. The policy conflict is not just a political or social issue, it could also jeopardize Pakistan’s international funding and participation in green projects. 

Engineer Obaidur Rehman Zia, the head of the Energy Unit at the Sustainable Policy Institute (SDPI), warns that Pakistan has so far suffered a financial loss of about $348 billion due to environmental destruction. If urgent measures are not taken, this cost will continue to increase. Thousands of Gwadar residents like Mahir Baloch need electricity. He says the government should find an immediate and sustainable solution for Gwadar.

However, solar parks or wind energy can be the best and quickest source of energy in this coastal strip.