Pakistan in ‘civil nuclear deal’ with China

www.dailytimes.com.pk
March 30, 2010

ISLAMABAD: Pakistan has entered a civil nuclear deal with China for the establishment of two nuclear power projects of 640 MWs in Chashma, Daily Times has learnt. The breakthrough deal – under which Pakistan would be provided a loan, technology and installation facilities – was finalised ahead of the latest round of the Pak-US strategic dialogue, as the federal cabinet granted financial approval at a meeting on March 24. Sources privy to the deal said the federal cabinet had approved an inter-government framework agreement on the financing of 'Chashma Nuclear Power Project 3' and 'Chashma Nuclear Power Project 4' with China. The sources said under the agreement, China would provide 82% of the total $1.912 billion financing to Pakistan as a 20-year soft loan, with an eight-year grace period.

In a bid to guarantee financing for the two plants, the inter-government framework agreement requires both countries to enter three loan agreements. Under the first loan agreement, Pakistan would be provided $104 million with an annual interest rate of 1%, management fee of 0.2% and a commitment fee of 0.2%. Under the second preferential buyer credit agreement, Pakistan would get $1 billion with an annual interest rate of 2%, a management fee of 0.2% and a commitment fee of 0.2% – while the third buyers credit agreement would provide Pakistan $474 million with an annual interest rate of 6%, a management fee of 0.75%, a commitment fee of 0.5% and an insurance rate of 7%.

However, according to the inter-government framework agreement, the annual composite interest rate would not exceed three% in any case. The sources said that frequent visits by President Asif Ali Zardar and Prime Minister Yousaf Raza Gilani helped secure the deal. They said the Executive Committee of the National Economic Council (ECNEC) had already approved the two projects. The Pakistan Atomic Energy Commission would be the executing agency for the establishment of the two plants – which would be completed in eight years. The sources said each 320-MW unit would contain a nuclear steam supply system, a turbine-generator set and the associated auxiliary equipment and installations.