Pakistan strikes $200 million deal with China to convert thermal plant into solar power

Pakistan has signed a $200 million groundbreaking deal with a Chinese firm for the transformation of a thermal power plant into a solar power facility, Pakistani state media reported on April 13.

As part of the deal, signed between Pakistan’s Northern Power Generation Co. Ltd. (NPGCL) and China’s Ningbo Green Light Energy Pvt Ltd., an existing thermal power plant located in Muzaffargarh will be converted into a 300 MW solar power facility, the state-run Radio Pakistan broadcaster reported.

Facilitated by the Special Investment Facilitation Council (SIFC), this initiative underscores Pakistan’s commitment to renewable energy solutions. The project will utilize land, assets, and infrastructure of generation company GENCO-III.

The project will significantly reduce the per unit cost of electricity by eliminating the need for Heavy Fuel Oil (HFO), according to the report.

“The project will generate 400 million units of electricity per year at a significantly lower cost, reducing the cost from forty-five rupees to fourteen rupees per unit,” the report said.

Converting the project to solar energy is expected to save $44 million annually by cutting import bills and providing attractive returns to stakeholders.

Cash-strapped Pakistan relies heavily on imported energy due to a lack of resources to run its oil- and gas-powered plants. The country is also struggling to tackle a balance of payments crisis, high inflation, and continuous currency devaluation.

To deal with these problems, Islamabad seeks to secure cheaper energy imports and alternative power generation methods to lessen the cost of power generation.

The agreement aligns with the Renewable Energy Transition goals of SIFC, which has been active in other sectors, including the upgrade of Brownfield Oil Refineries to boost domestic refining capabilities.

SIFC has also finalized agreements that would allow expansions and enable the production of EURO-V standard fuel, effectively doubling capacities at various refineries, including Pakistan Refinery Limited (PRL).

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