Pakistan’s solar boom adds pressure on Chinese-backed coal plants: report

Pakistan's rapid transition towards solar power is creating new challenges for the country's struggling power sector, according to a Bloomberg report. The shift to distributed solar generation is reducing demand for grid electricity, straining utilities' finances and threatening the repayment prospects of Chinese-backed coal-fired power plants.

In the industrial zone near Port Qasim, just east of Karachi, solar panels now cover rooftops of about 400 companies, powering what was once a coal-fired plant built as part of China's Belt and Road Initiative. Local factory owner Zaheer Allana said the solar panels provide a fifth of his facility's electricity needs at less than a third of the previous cost.

The shift to solar is causing a "death spiral" for utilities, as every consumer opting for solar increases the burden on the grid. This rapid transition is particularly problematic for Chinese-backed power projects, with overdue payments to Chinese electricity plants exceeding $1.5 billion and outstanding project debt reaching $3.1 billion last year.

Pakistan's Energy Minister Awais Leghari said the government is seeking to extend the repayment period for power-sector debt rather than reducing the outstanding amounts, but Chinese officials have not shown willingness to make significant concessions.