Need stressed for exploring modern financing mechanisms in energy sector

SDPI hosts webinar on ‘Scoping the Feasibility of Early Retirement of Coal Power Plants under CPEC’

ISLAMABAD  -  Experts at a webinar stressed the need for exploring innovative fi­nancing mechanisms in the con­text of Pakistan’s energy sector to facilitate the early retirement of coal power plants under China-Pa­kistan Economic Corridor (CPEC). 

The webinar titled ‘Scoping the Feasibility of Early Retirement of Coal Power Plants under CPEC’ was organised by the Sustaina­ble Development Policy Institute (SDPI) here. 

Speaking on the occasion, Musta­fa Hyder Sayed, the Executive Di­rector of Pakistan-China Institute, stressed the need for political con­sensus to create conducive envi­ronment to boost investments in energy sector. He underscored the need to move beyond theory and make a bankable case for retiring the coal power plants in Pakistan, which is acceptable to investors and is financially sustainable. Ex­plaining the delay in Gwadar pow­er plant, he noted challenges with Sinosure, a Chinese insurance company, indicating that support for new power plants is contin­gent on settling debts from pre­vious projects. Amid the pressing climate urgency, the challenge lies in urging the retirement of coal power plants, he said.

Shuang Liu, the Senior Associ­ate and China Finance Lead at the World Resources Institute (WRI), emphasised the importance of gaining a clear understanding of investor motivations and the con­straints that exist in the early re­tirement of these plants. She high­lighted the need to revisit and renegotiate terms, particularly with the major financial institu­tions such as the China Develop­ment Bank and EXIM Bank.

Haneea Saad, Energy Finance Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said that immediate re­tirement for the selected coal fleet had economic valuation of $1.1 billion-1.6 billion and delays in re­tirement will significantly reduce these values to a range of $398 million to $628 million, highlight­ing the economic implications.

Julia Skorupska, Head of Sec­retariat, Powering Past Coal Alli­ance (PPCA) urged governments and power companies to create credible transition plans, increase public finance for coal retirement, provide regulatory clarity, and ac­tively generate pipeline projects. She called for including social cost of emissions from coal pow­er plants in estimation processes.

Dr Daniele Malerba, Senior Re­searcher at the German Institute of Development and Sustainability (IDOS), stressed the need to con­sider the social and local conse­quences of such transition. He em­phasized the need to leverage the JETPS framework, pointing out that success depends on involving Chinese stakeholders.

Christoph Nedopil Wang, Direc­tor of Griffith Asia Institute, cited Egypt as a successful model in ex­ecuting a debt-for-climate swap, showcasing the potential for inno­vative financial arrangements to address climate-related challeng­es, which can resolve the financial challenges faced by Pakistan.

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