China to build £1.2 billion power line across Pakistan

China’s State Grid Corporation is set to build a $1.5-billion (£1.22bn) power line across Pakistan to enable the transmission of 4,000 megawatts of electricity from the country’s north to south, the government said on Friday (December 30).

Pakistani and Chinese officials signed an investment agreement in Beijing the previous day to build the country’s first high-voltage, direct current (HVDC) line, according to a government statement. It was inked by Mohammad Younus Dagha, Pakistan’s secretary of water and power, and Shu Yinbiao, chairman of State Grid Corporation of China.

The high-capacity transmission line will be a key component in transmission infrastructure, the Pakistani government said. It will link the national grid between the southern town of Matiari, near a new power station, to Lahore city in the east some 1,000 kilometres (620 miles) apart.

Construction will begin later this month, and should take about 20 months, said a spokesman for the Pakistani prime minister’s office.

The project is the latest in a series of big Chinese investments, most of which fall under a planned $55 billion worth of projects for a China Pakistan Economic Corridor (CPEC).

The country has been struggling to provide enough power to its nearly 200 million citizens for years with widespread rolling blackouts in both rural and urban areas, and prime minister Nawaz Sharif has vowed to solve the crisis by 2018.

The government has managed to reduce load shedding – scheduled power outages – in some areas, but production gaps and distribution woes remain.

Sharif inaugurated Pakistan’s fourth nuclear power plant last week, a joint collaboration with China that adds 340 megawatts to the national grid as part of the government’s efforts to end a growth-sapping energy deficit.

The energy sector has traditionally struggled to cover the cost of producing electricity, leading the government to divert $2 billion annually as a subsidy, according to a recent report commissioned by the British government.

China is ramping up investment in its south Asian neighbour as part of a $46-billion project unveiled last year that will link its far-western Xinjiang region to Pakistan’s Gwadar port with a series of infrastructure, power and transport upgrades.

Last week, Pakistan’s main bourse announced that a Chinese consortium was set to acquire a 40 per cent stake in the stock exchange in a deal estimated at $84 million.

Shanghai Electric announced in August it would buy a majority stake in the utility that supplies energy to Karachi for $1.7 billion, in the country’s biggest ever private-sector acquisition.