Sahiwal power station

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Sahiwal power station is an operating power station of at least 1320-megawatts (MW) in Sahiwal, Punjab province, Pakistan.

Location

Table 1: Project-level location details

Plant name	Location	Coordinates (WGS 84)
Sahiwal power station	Sahiwal, Sahiwal, Punjab province, Pakistan	30.71422, 73.23802 (exact)

The map below shows the exact location of the power station.

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Unit-level coordinates (WGS 84):

• Unit 1, Unit 2: 30.71422, 73.23802

Project Details

Table 2: Unit-level details

Unit name	Status	Fuel(s)	Capacity (MW)	Technology	Start year
Unit 1	operating	coal: bituminous	660	unknown	2017
Unit 2	operating	coal: bituminous	660	unknown	2017

Table 3: Unit-level ownership and operator details

Unit name	Owner	Parent
Unit 1	Huaneng Shandong Ruyi (Pakistan) Energy [100%]	China Huaneng Group Co Ltd; Shandong Ruyi Technology Group
Unit 2	Huaneng Shandong Ruyi (Pakistan) Energy [100%]	China Huaneng Group Co Ltd; Shandong Ruyi Technology Group

Project-level coal details

• Coal source(s): imported

Background

In November 2013, the Punjab government and China Western Power Company signed a memorandum of understanding (MoU) to set up two 660 MW coal plants in Sahiwal. The projects would be completed in two and a half years and China Western Power Company would contribute about US$1.5 billion to the projects.

On May 30, 2014, Prime Minister Nawaz Sharif attended a ground breaking ceremony for the project.

According to a February 2015 report, the Sahiwal project was "in doldrums" due to lack of interest from potential investors. The project received a letter of support from the Pakistan Private Power and Infrastructure Board on April 17, 2015.

In December 2022, electricity production at Pakistan's three power stations operating on imported coal (Sahiwal power station, Port Qasim EPC power station and Hubco power station) fell to a five-year low. The slump was due to high prices; quality coal was averaging $253.83 per ton in 2022, compared to $114.24 per ton in 2021 and $59.91 per ton in 2020.

Project included in China-Pakistan Economic Corridor

In April 2015, it was announced that Sahiwal power station was among the projects included in the China-Pakistan Economic Corridor (CPEC). According to the announcement, the plant would be developed under the sponsorship of Industrial and Commercial Bank of China Limited, Huaneng Shandong Electricity Limited, and Shandong Ruyi Group. China Western Power Company, which in 2013 was identified as the sponsor, was not mentioned in the facility agreement. Huaneng is one of China's leading state-owned utilities. Shandong Ruyi Group is a textile company.

Legal challenge

In October 2015, the Lahore High Court imposed a stay on the development of the plant in response to legal action by two dozen residents and farmers. The legal action argued the proposed project would adversely affect some of Pakistan’s best agricultural land as well as the health of people and nearby industry. They also argued that the environmental assessment report on the project had been done hastily and contained errors, and that the plant would breach air pollution standards. The court has directed a further hearing on the project.

In January 2016, the Lahore High Court accepted assurances by the Punjab Government that environmental standards at the plant would be enforced, dismissing the legal challenge against the plant.

Revitalization and construction

In July 2015, a consortium consisting of China Huaneng and Shandong Ruyi Group announced that it had taken over the project, with Huaneng Shandong's President assuring Chief Minister Shahbaz Sharif that the project would be completed on schedule and would start producing electricity in 2017. At that time, orders had been given for the purchase of turbines, generators, and boilers, all of which would reach the project site ahead of schedule.

Construction began in June 2015. In May 2016, construction was well underway, with completion expected by December 2017. The project would be the first CPEC project to be completed.

Unit 1 went online in May 2017. Unit 2 was completed in June 2017 and began operation in July 2017. There's a 30-year PPA agreement with CPPA-G (guaranteed off-take). The Implementation Agreement provides sovereign guarantee, given adherence to agreed performance benchmarks (Availability: 85%, Efficiency: 39.75%). Shandong Huatai Electric Operations & Maintenance (Private) Limited is appointed as the O&M operator for the plant. The plant operates on imported coal which is sourced through China Huaneng Group Fuel Company Ltd under the Coal Supply Contract.

Post commissioning updates

In July 2018, the National Accountability Bureau (NAB) launched inquiries into alleged corruption at Sahiwal power station and Port Qasim EPC power station.

In June 2019, it was reported that the 1,320 MW coal plant was on the brink of closure after the government was unable to pay the US$127 million of charges it owed the developer, China Huaneng Group.

In 2020 and 2021, articles claimed that the so-called "eco-friendly" project had "changed local people's negative impression about thermal power plants." These appear to be views pushed in the media by the company, including the director of the Corporate Culture Department for operator Huaneng Shandong Ruyi Energy.

In January 2021, Asia Times disclosed that Huaneng Shandong Ruyi Energy had inflated the plant's set-up costs. A committee found overpayments of 483.64 billion Pakistani rupees (US$3 billion) to several companies over the course of three years.

A 2021 State of Industry report listed the plant as the only "achieved" project in the period of interest. As of June 2021, the power station was running at full capacity. A 2022 State of Industry report states that the plant generated 6881 GWh in the year ending June 2022, and 7342 GWh in the year ending June 2021.

In July 2023, the NAB closed their investigation into Sahiwal power station and Port Qasim EPC power station, which allegedly caused an annual combined loss of Rs. 175 billion (US$617 million) to the national exchequer.

Potential conversion to domestic coal

In April 2024, the government of Pakistan announced their intent to convert coal plants currently using imported coal to run on domestic coal. This reportedly included three plants backed by Chinese companies – Sahiwal power station, Port Qasim EPC power station, and Hubco power station. Pakistan's Prime Minister had directed the Ministry of Planning to raise their interest in converting these plants to run on domestic coal with China's National Development and Reform Commission. Pakistan estimated that converting the three plants would save US$800 million on the cost of coal.

In July 2024, a delegation from Pakistan was expected to visit Beijing and seek approval from Chinese coal plant owners to switch from imported coal to domestic Thar lignite. The proposal follows an agreement with the International Monetary Fund for a US$7 billion, 37-month loan program to avoid Pakistan defaulting on existing loans. Later in July, the Chinese government reportedly agreed to Pakistan’s request to convert the Hubco power station, Sahiwal power station, and Port Qasim EPC power station to domestic Thar coal. Part of the conversion process will require Pakistan Railways to build a 105 km track connecting the Thar coal mines to the existing railway at New Chhor in Sindh province, as well as an 18 km spur line to Bin Qasim and Port Qasim. The proposed line would have capacity for 10 million tonnes of lignite a year. The Pakistan government and the Sindh provincial government were reportedly planning to split the cost of the 58 billion-rupee (US$210 million) railway project.

In August 2024, Pakistan’s Ministry of Energy established a committee to prepare joint bankable technical and financial feasibility studies on converting CPEC power plants from imported coal to domestic Thar lignite. In a meeting with Chinese officials, Pakistan suggested financing the plant conversions could be done by local banks and not affect current loan agreements with Chinese banks. However, reporting from September 2024 indicated that Pakistani banks were reluctant to finance the conversions to domestic coal. An anonymous bank official reportedly said that banks were concerned about the pollution from coal projects and the central bank preferred to finance renewables projects.

Financing

• Source of financing: US$1.44 billion in debt from ICBC; US$360 million in equity from Huaneng Power International and Shandong Ruyi Technology Group

In February 2017, financing for the project was closed. A US$1.44 billion loan was provided by ICBC. US$360 million in equity was provided by Huaneng Power International and Shandong Ruyi Technology Group.

As of July 2022, the company has successfully repaid 27% of its project debt ($ 1,44bn) obtained from Chinese lenders with the consortium led by Industrial and Commercial Bank of China (ICBC).

Corruption allegations

In March 2024, an investigation was launched into the long-term coal supply contract for the Sahiwal power station. Pakistan's outgoing Minister for Energy detailed allegations that the contract had been given to two favored coal suppliers for 2022–2023, who were reportedly overcharging relative to the market rate. Following objections from other suppliers, the National Electric Power Regulatory Authority switched supply to spot pricing, which resulted in a significant fall in the cost of imported coal. However, the original supposedly preferred suppliers resumed coal sales at premium prices after the new suppliers were disqualified, allegedly on dubious grounds. The estimated overcharging could amount to as much as 50 billion rupees (US$179 million) over the last 18 months, and electricity customers could eventually bear the burden of the alleged excess charges.

Impact

In February 2024, a peer-reviewed Public Library of Science article investigated heavy metal contamination in the topsoil surrounding Sahiwal power station.

Articles and Resources

Additional data

To access additional data, including an interactive map of coal-fired power stations, a downloadable dataset, and summary data, please visit the Global Coal Plant Tracker on the Global Energy Monitor website.