绿色金融与发展中心-中国主导的巴基斯坦和越南燃煤发电厂早期淘汰融资的机会（英）

Chinacoalexit:OpportunitiesforChina-ledfinancingofearly

phasedownofcoal-firedpowerplantsinPakistanandVietnam

ChristophNedopil,LawrenceAng,MattCarpioandMengdiYue

March2024

Chinacoalexit:

OpportunitiesforChina-led

financingofearlyphasedown

ofcoal-firedpowerplants

inPakistanandVietnam

ChristophNedopil,LawrenceAng,MattCarpioandMengdiYue

i

AboutthisPublication

ThisbriefisproducedbytheGriffithAsiaInstitute(GAI)atGriffithUniversity,Brisbane,AustraliaincollaborationwiththeGreenFinance&DevelopmentCenter(GFDC)oftheFanhaiInternationalSchoolofFinanceatFudan

University,Shanghai,PRChinaandClimateSmartVenturePteLed,Singapore.

Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthor(s)and

shouldnotbeattributedinanymannertoGriffithUniversity,FISF,FudanUniversityorClimateSmartVentures,toitsaffiliatedorganisations,ormembersofitsBoardofExecutiveDirectors.

ThepublicationisbasedonaprojectsupportedbytheCoalAssetTransitionAccelerator(CATA).

Pleaseciteas:

Nedopil,C,Ang,L,Carpio,MandYue,M,(2024):Chinacoalexit:OpportunitiesforChina-ledfinancingofearly

phasedownofcoal-firedpowerplantsinPakistanandVietnam,GriffithAsiaInstitute,GriffithUniversity(Brisbane),GreenFinance&DevelopmentCenter,FISFFudanUniversity(Shanghai),andClimateSmartVentures(Singapore),DOI:10.25904/1912/5201.

©2024GriffithAsiaInstitute,GriffithUniversity,GreenFinance&DevelopmentCenter,FISFandClimateSmartVentures

Coverpicture:Engineerandconstructionsitemanagerdealingwithacoalpowerplantinthebackground.(Image:Shutterstock)

ii

Acronymsandabbreviations

ACT

AcceleratingCoalTransition

ADB

AsiaDevelopmentBank

ALLIES

Choosingyourallies

BAU

Businessasusual

CFB

CirculatingFluidisedBed

CFPP

Coal-firedpowerplant

CIF

ClimateInvestmentFunds

CPPA

CentralPowerPurchasing

DE

Debt-to-equity

DISCO

Distributioncompanies

ETM

EnergyTransitionMechanism

EV

EnterpriseValue

EVN

ElectricityofVietnam

FCFE

Freecashflowtoequity

FiT

Feed-intariffs

FUTURE

MinistryoftheFuture

G7

GroupofSeven:Canada,France,Italy,Germany,Japan,theUnitedKingdomandtheUnitedStatesofAmericaandtheEuropeanUnion

GEM

GlobalEnergyMonitor

GFANZ

GlasgowAllianceforNetZero

IEA

InternationalEnergyAgency

IGCEP

IndicativeGenerationCapacityExpansionPlan

IPG

Internationalpartnersgroup

JETP

JustEnergyTransitionPartnership

MAS

MonetaryAuthorityofSingapore

MDB

Multilateraldevelopmentbank

MEE

MinistryofEcologyandEnvironment

MOFA

MinistryofForeignAffairs

MOFCOM

MinistryofCommerce

MOIT

MinistryofIndustryandTrade

MPO

Managedcoalphase-out

MW

Megawatt

NDRC

NationalDevelopmentandReformCommission

NEPRA

NationalElectricPowerRegulatoryAuthority,Pakistan

NPV

NetPresentValue

OECD

OrganisationforEconomicCooperationandDevelopment

PC

PulverisedCoal

PDP8

8thPowerDevelopmentPlan

RE

Renewableenergy

SOEs

State-ownedenterprises

SOFIs

State-ownedfinancialinstitutions

US

UnitedStatesofAmerica

USD

USdollar

WEF

WorldEnergyForum

iii

Contents

AboutthisPublicationi

Acronymsandabbreviationsii

Contentsiii

Executivesummary1

1.Introduction2

2.Thecontextofcoalpowerphase-down4

2.1Globalenergytransitionandcoalretirementtrends4

2.2China’sinternationalcoalpolicy6

2.3Vietnam:Powersectorcontextandpolicy6

2.4Pakistan:Powersectorcontextandpolicy8

3.Keyobjectivesandmethodology10

3.1Duediligenceandscenariosdevelopment10

3.2Criteriadevelopmentandplantselection12

3.3Financialanalysis14

4.Results17

4.1Vietnam17

4.2Pakistan18

5.Discussionandrecommendations20

Appendix1:SamplecashflowsforVietnam’sHaiPhongandQuangNinhCFPPs21

Appendix2:SamplecashflowsforPakistan’sSahiwalandEngroCFPPs22

Abouttheauthors23

AboutGriffithAsiaInstitute24

AbouttheGreenFinance&DevelopmentCenter24

AboutClimateSmartVentures24

Notesandreferences25

1

Executivesummary

Prevalentliteratureassumesthatcoal-firedpower

plants(CFPP)inAsiaaredifficulttoretireduetotheirrelativelyyoungage.Thisstudyevaluateshowthe

financialvaluesofsixChinese-sponsoredcoal-firedpowerplants(CFPP)inPakistanandVietnamare

impactedthroughearlyplantretirementunder

differentfinancingandeconomicscenarios.Contrarytocommonassumptions,theresultsindicate:

.ForallsixplantsinVietnamandPakistan,our

modellingshowedanincreaseinenterprisevaluewithAsset/PortfolioRefinancingthroughearly

retirement;

.Whenrefinancingisbundledwithrenewable

energyinvestments,theenterprisevalueswouldmorethantriplecomparedwiththevalueoftheoriginalpowerpurchasingagreement;

.Accordingly,investorscouldbenefitfinanciallyfromearlyCFPPretirement;

.Youngerplantscanshavemoreyearsofftheircommerciallifetimeandberetiredearlierduetohigherrelativedebtburdenandhigherfinancingcostsduringtheearlyyearsofoperations;

.InPakistanwithitsveryyoungCFPPs,

refinancingwouldallowtheretirementofthe

threeplantsseventonineyearsaheadof

schedule—whileimprovingenterprisevalue.

Basedontheresults,thisstudyrecommendsthat

Chinesecompanies,financialinstitutionsandother

investorsengagedinoverseasCFPPsconsider

reducingtheirCFPPexposurebyshiftingto

renewableenergyinvestments.Enterprisevalueand

feasibilityofCFPPretirementbundledwithrenewable

investmentwouldfurtherimprovethrough

concessionalloans,creditenhancementmechanisms

andinnovativefinancinginstrumentssuchasdebt-

for-climateswapsinvolvingChineseCFPPsponsors.

Note:datawerecollectedasofJanuary2023.The

analysesanddiscussionsectionofthestudywas

draftedinthethirdquarterof2023andfirst

presentedpubliclyduringtheWorldEnergyForum

(WEF)inNovember2023.Resultsandfindingsmay

changegivennewnationalpolicies,financialand

economicconditions.

FloatingSolarEnergyProjectinVietnam.(Image:AsianDevelopmentBank)

2

1.Introduction

Earlyphase-downofcoal-firedpowerplants(CFPPs)isdiscussedinemerginganddevelopedcountries

globallyasasolutionforreducingemissionsfaster.1OrganisationforEconomicCooperationand

Development(OECD)countriesandtheEUhavetakentheleadinphasingoutcoalandretiringexisting

CFPPs,with56percentofoperatingcapacityeitherclosedalreadysince2010orscheduledtocloseby2030.2

Inemergingeconomies,particularlyacrossAsia,wheremostofthenewadditionsofCFPPshavetakenplaceoverthepast15years,3severalinitiativeshavebeen

launchedtosupporttheearlyphase-downofCFPPs:

.EnergyTransitionMechanism(ETM)waslaunchedin2021bytheAsianDevelopmentBank(ADB)asapublic-privatefinancevehicletoexpeditethe

retirementorrepurposingoffossilfuelplants

withintheAsiaandPacific.InApril2023,ADB

announcedthat“thepriorityforPakistanisto

transitionawayfromoil-anddiesel-firedpowerplants,althoughcoal-firedpowerplantswilllikelybeaddressedaspartofETM’spre-feasibility

study”.ADBcompletedthepre-feasibilitystudylastNovember2023.Inthesameupdate,ADBmentionedthatit“conductedapre-feasibility

studyin2021andisindiscussionswithkey

ministriestoinitiateafullETMfeasibilitystudy”.

.JustEnergyTransitionPartnership(JETP)was

launchedin2021atCOP26inGlasgowwithagoaltoexpandpublicandprivatefinancingfor

equitableenergytransitionsofemerging

economies.JETPisfinanciallysupportedmainlybytheinternationalpartnersgroup(IPG)comprisingFrance,Germany,theEuropeanUnion,theUnitedKingdomandCanada,andprivatefinancial

institutions.Todate,fourcountrieshavejoined

JETP:SouthAfricain2021,IndonesiaandVietnamin2022,andSenegalin2023.

.AcceleratingCoalTransition(ACT)launchedin

2021isacomprehensiveprogramdesignedto

assistcountriesintransitioningawayfromcoal.

ACToperatesasamulti-multilateraldevelopmentbank(MDB)financingplatformundertheClimateInvestmentFunds(CIF).TheprogramhasreceivedsubstantialfinancialbackingfromtheG7,who

pledgeduptoUSD2billion.

.TheASEANTaxonomyforSustainableFinance

releasedinMarch2023includescoalphase-outactivitiesinthePlusStandardsframework.It

categorisescoalphase-outinto“green”ifthe

CFPPsachievephase-outby2040and“amber”iftheCFPPsachievephase-outby2050(formoredetailspleaserefertotheoriginaldocument).4

.GlasgowAllianceforNetZero(GFANZ)inJune

2023haspublishedguidanceformanagedcoalphase-out(MPO)inAsia-Pacific,whichwas

developedincollaborationwithlocalfinancialandpolicystakeholders,aswellasknowledge

partners.5

.MonetaryAuthorityofSingapore(MAS)in2023evaluatestheinvestmentinblendedfinance

instrumentstoprovidefinancingforacceleratedphase-downofcoal-firedpowerplantsinthe

Asianregion6andhasintroducedtransition

creditsasacomplementaryfinancingmechanism“toaccelerateandscaletheearlyretirementof

CFPPs”.7

However,atthispoint,theearlyphase-downof

CFPPsinemergingeconomiesisstillconsidereda

challenge.First,manyemergingeconomieshave

rapidlygrowingelectricityneeds:EmergingAsian

economies’electricityneedsareprojectedtogrow

about3to5percentperyearduetopopulation

growth,economicgrowth,andtheelectrificationof

industryandtransport.8Thismakestheretirementof

existingpowergenerationunitsmorechallengingas

significantinvestmentsinrenewableswouldbe

neededtogrowtheelectricitysectortomeetdemand

whilesimultaneouslycompensatingforthegeneration

capacitylossthroughCFPPretirement.

Second,thereisabeliefthat“ingeneral,theoldera

plantis,thecheaperitwillbetoretirebecausemore

ofitsinitialinvestmenthasalreadybeenrecouped”.1,9

AsmanyCFPPsinemergingeconomiesarerelatively

young(e.g.,theaverageageinVietnamis6.7years

and10.8yearsinIndonesia,comparedtomorethan

40yearsintheUS)3,theirearlyretirementisregarded

ascostly.

AthirdchallengeistheroleofChina’sstate-owned

enterprises(SOEs)andstate-ownedfinancial

institutions(SOFIs),whohavebeenamongthetop

sponsorsofCFPPsinemergingAsiabuthavenot

beenincludedinanyoftheconsiderationsinthe

region.10,11

Thisstudyaddressesthethreechallengesby

analysingthefinancialcostsandopportunitiesof

China-sponsoredCFPPsinVietnamandPakistanand

expandsonpreviousstudiesthatusedrepresentative

modelplantswithgeneralisedassumptions.10

3

Weusedfinancialandoperationaldataofsix

operatingcoal-firedpowerplants(threeinPakistan,andthreeinVietnam)tocalculatetheirenterprise

valueswiththediscountedcashflowmethod.12Wealsobuiltthreefuturescenariostomodelexternal

risksonfuturecashflowsoftheCFPPsandpotentialearlyretirementoptions(forexample,CFPP

retirementonlyvsre-investmentintorenewable

energyprojects).Furthermore,insteadofmodellingretirementoptionsthatrelyonfinancefroma

hypotheticalpriceforavoidedcarbonemissions,thestudyutilisedachievablefinancingstructuresto

establishretirementoptions.Finally,theresultsofthefinancialvaluesandprojectionsoftheearlyCFPP

retirementprogramsweresupplementedbyan

additionalscenariothatfactoredinrenewableenergy

(RE)alternatives.

Theresultsshowthatinvestorscouldbenefit

financiallyfromtheearlyretirementofCFPPs.

Contrarytopreviousbelief,thefeasibilityofretiring

youngerplantsishigher,asyoungerplantshavea

higherdebtburdenthatleadstohigherfinancing

costsduringtheearlyyearsofoperations.Oncea

plantbecomesolderanditsdebtispaidoff,moreof

itsrevenuesbecomeprofits,diminishingthepotential

gainsofearlyretirement.Furthermore,theresults

showthatwhencombiningtheretirementofCFPPs

withinvestmentintoRE,enterprisevaluesfor

investorswouldatleasttriplecomparedto

completingtheoriginalPPA.

FoundationwindenergyinPakistan.(Image:AsianDevelopmentBank)

4

2.Thecontextofcoalpowerphase-down

2.1Globalenergytransitionandcoalretirementtrends

Energytransitioninpowergenerationincludesthephase-downoffossilfuels,expansionofRE

capacities,energystorageandgridinfrastructure.

Manycountrieshavepledgedthroughjoint

initiativesorself-declarationtoreducedependence

oncoalpowerandincreasefinancialsupportforRE

(Figure1).

Figure1:EnergyTransitionInitiativesAroundtheWorld

Source:Authors

Despitebeingthebiggestsourceofgreenhousegases(seeFigure2)amongthermalpowergenerationsources,coal

remainsamajorsourceofelectricityindevelopingAsia

(Figure3)duetoitslowcosts.Asaconsequenceofthedecreasingcostofalternativeenergies,operationsof

existingCFPPshavenotonlynegativeclimateeffectsbut

alsoincreasedeconomiccosts,givenitisnowcheaperto

produceelectricityviarenewablescomparedtocoal-fired

powerplantsonaperkwhbasis13.Inaddition,previous

volatilityofcoalandothercommoditypricesgloballymade

countriesrealisethathighdependenceoncoalwillnot

translatetosavingsinthelongrun.

Figure2:ShareofGHGemissionsandtotalenergysupplybyproduct,World,2021

Source:InternationalEnergyAgency,202114

5

Toreducethevolatilityofenergycostsandhigh

climateemissions,interestinthe“earlyretirement”ofCFPPshasbeenincreasingasseenintheriseinthe

numberofvariousregionalandglobalprograms(see

Figure3).Nevertheless,globalcoalpowercapacity

continuestomaintainanetgrowth.

Figure3:Shareofelectricityproductionfromcoalin2022

Source:OurWorldinData202215

EarlyretirementofCFPPsindevelopingAsiaisevenmoreofanuphillbattleduetotherelativelyyoungage

ofexistingfleetsandtherapidlygrowingelectricity

demandforcheapandstablepower.

Figure4:Globalcoalpoweraddedvsretired

Source:GlobalEnergyMonitor3

6

2.2China’sinternationalcoalpolicy

Chinahasadualroleastheworld’slargestconsumer

andproducerofcoal,aswellasamajorpublic

financierofCFPPsandexporterofcoal-related

technologies,suchasboilers,turbines,and

generators.Itishometohalftheworld’soperatingcoalcapacityand57percentofpre-constructioncoalpowerprojectsasof2022.

China-fundedCFPPsareheavilyconcentratedin

SouthAsiaandSoutheastAsia,whichaccountfor88percentofChina’soverseascoalinvestmentasof

2022.Asof2020,thetopfivecountriesreceivingthissupport(inbillionUSD)fromthetwolargestoverseaslenders,ChinaDevelopmentBankandChinaExport

andImportBankareIndonesia,Vietnam,South

Africa,Pakistan,andRussia.16

AsmajorfinanciersofChina’soverseasenergy

investmentarestate-ownedenterprisesandbanks,

thepoliciesoftheChinesecentralgovernmentand

ministriesplayakeyroleinguidingtheirpractices.

Since2013,China’spoliciesregardingenvironmental

andsocialstandardsinBRIinvestmenthavebecome

morestringent,suggestingcompaniesfollowstricter

internationalorChinesestandardsinsteadofhost

countries'principlesandimprovingESGreporting

standards(Figure5).In2021,PresidentXiJinping

announcedthatChinawouldnotbuildnewcoal-fired

powerprojectsabroad.

Figure5:China’soverseasenergyinvestmentbytechnologyandenvironmentalgovernancepolicies

Source:Authors

2.3Vietnam:Powersectorcontextandpolicy

Vietnam’spowerindustryisunderthejurisdictionoftheMinistryofIndustryandTrade(MOIT).Under

MOIT,theElectricityRegulatoryAuthorityofVietnamoverseessectorregulation;severalotherbranches

overseepolicy,researchandplanning.

Vietnam’spowersectorhasacoal-dependentsupply

structure.In2022,Vietnam’stotalinstalledcapacity

was76GW,dominatedbycoal,naturalgasand

hydropower;however,theshareofcoalhas

decreasedslightlysince2019asaresultofgrowthin

solarandwindinstalledcapacity(Figure6).17

7

Figure6:HistoricalinstalledcapacityforelectricitygenerationinVietnam

Source:VietnamElectricityNationalLoadDispatchCentre,202218

AccordingtoGlobalEnergyMonitor,abouttwo-

thirdsoftheoperatingandunder-constructioncoalpowerunitsinVietnamarestate-owned,mostlybyElectricityofVietnam(EVN).EVNisalsothelargestbuyerofelectricityinVietnamandholdsamonopolyontransmissionanddistribution.19

Table1:LatestlistofChina-backedCFPPsinVietnam

BasedonGlobalCoalProjectFinancedatain2022,

thetotalfinancesecuredforVietnamCFPPsis

aroundUSD20billion,themajorityofwhichis

backedbydebtfromChinesebanksandthese

CFPPsform16percentofthecountry’stotalpower

supply(Table1).

CFPPTechnology

Capacity(MW)

COD

Age(year)

CoalSupply

MaoKhePS

CFB

440

2012

11

Local

AnKhanhPS

CFB

115

2015

8

Local

ThangLongPS

CFB

600

2018

5

Local

CaoNganPS

Subcritical

115

2006

17

Local

QuangNinh-1

Subcritical

600

2010

13

Local

HaiPhongTPS2

Subcritical

600

2013

10

Local

DuyenHai1

Subcritical

1,245

2015

8

Local

MongDuongPS2

Subcritical

1,200

2015

8

Local

VinhTanPS1

Subcritical

1,200

2018

5

Imported

DuyenHai2

Subcritical

1,320

2021

2

Imported

HaiDuongTPP1

Subcritical

1,200

2021

2

Local

VinhTanPS2

Supercritical

1,245

2014

9

Imported

ThaiBinh2

Supercritical

1,200

2023

0

Local

VanPhongPS

Supercritical

1,320

2023

0

Local

Source:Authors

8

ThegovernmentofVietnamhasbeenactivelyexploringenergytransitionpolicies.

.InNovember2021,Vietnamannounceda

carbon-neutraltargetby2050andjoined

declarationsofendingnewcoalinvestmentsduringCOP26.

.InDecember2022,VietnambecamethethirdcountryreachingaJustEnergyTransition

PartnershipwithG7countriesfollowingSouthAfricaandIndonesiaandwillmobiliseaninitial$15bnofpublicandprivatefinanceover3-5yearstosupportVietnam'sgreentransition.

.InJanuary2023,moresupportingpoliciesfor

feed-intariffs(FiT)andothertaxreliefswithFiTextensionsforsolarandwindprojectswere

announced.

.InMay2023,the8thPowerDevelopmentPlan

(PDP8)waspublished.AccordingtoPDP8,

VietnamwillnotbuildnewCFPPsafter2030.

CFPPcapacitieswilldecrease,andasmartgrid

systemwillbebuiltthatcanintegrateandsafelyoperatelarge-scaleREinstallations.In2050,coalwillnotexitthepowermixandsolarpowerwill

becomethedominantenergysource.

However,complexityandchallengesremain,

illustratedbythemanyrevisionsofPDP8andover

twoyearsofconsultationwithpublicandprivate

stakeholders.ThelatestroundofFiTfornewsolaris

significantlylowerthanthelastroundandbelow

marketexpectations,makingthenextsetofRE

programsstilluncertain.

2.4Pakistan:Powersectorcontextandpolicy

AsofJune2022,fossilfuelsaccountfor55percent

ofthetotalinstalledgenerationcapacityinPakistan.

Coalcontributes14percentofthetotal(Figure7)20.

InPakistan,thegovernmentisthesolebuyerof

powerthroughtheCentralPowerPurchasingAgency

(CPPA).Revenuesareearnedfromelectricity

consumers,whichfundthepaymentstosuppliers,

distributors,transmissioncompanies,andgeneration

companies.

CFPPsarerelativelynewbutstrongentrantssince

2016withPakistanfocusingontheindigenisationof

thepowermix(withlocalTharcoal).China’s

participationinfundingPakistanCFPPsisrecent,but

theyhavebuiltnearly7GWofcapacitywithin5years,

becomingoneofthelargestfinanciersandownersin

thecountryandforming90percentofthecountry’s

totalcoal-firedcapacitymixasofJune2023(Table

2).

Figure7:ShareofinstalledcapacityforelectricitygenerationinPakistanin2022

Source:AuthorsusingdatafromIndicativeGenerationCapacityExpansionPlan2022-31

9

Table2:LatestlistofChina-backedCFPPsinPakistanasofJune2023

CFPPTechnology

Capacity

(MW)

COD

Age

(year)

Coal

Supply

SahiwalCFPP

Supercritical

1320

(660MWx2)

2017

5

Imported

CFPPatPortQasimKarachi

Supercritical

1320

(660MWx2)

2018

4

Imported

ChinaHubCoalPower

Project,HubBalochistan

Supercritical

1320

(660MWx2)

2019

3

Imported

EngroTharCFPP

Sub-critical

660

2019

3

Local

SSRLTharCoalBlock-I7.8mtpa&PowerPlant

Sub-critical

1320

(660MWx2)

2022,2023

0

Local

HUBCOTharCFPP

Sub-critical

330

2022

0

Local

HUBCOThalNovaTharCFPP

Sub-critical

330

2023

0

Local

CFPPatGwadar

Supercritical

300

expected

2026

0

Imported

PakistanhasmadesomeeffortstoboostRE

generation,butdomesticcoal-firedpowerisstillthesolutiontoprovideitscitizenswithreliableelectricity,asPakistanplanstoquadrupleitsdomesticcoal-firedcapacitytoreplacegas.21

.Since2006,PakistanhasissuedseveralRE-

supportiveanddecarbonisationpolicies,aimingforamorediverseandcleanerelectricitymix.

.InAugust2020,thePakistangovernment

formallyapprovedtheAlternativeandRenewableEnergyPolicy2019,whichaimstoboostthe

shareofelectricitygeneratedfromrenewable

sourcesfromaround5percenttoatleast20percentby2025and30percentby2030.

.AccordingtoPakistan’spowergeneration

expansionplan,theIndicativeGeneration

CapacityExpansionPlan(IGCEP)2022-2031,

thereisanother1,290MW(300MWimported

coal,990MWlocalcoal)capacityplannedbefore2031.

.InMarch2023,PrimeMinisterMuhammadShehbazSharifinauguratedtwoCFPPswithacapacityof1,650megawattsofelectricityinTharparkarusinglocalTharcoal.The

projectsincludethe1,320MWShanghaiElectricpowerplantandthe330MWThalNovapowerplant.

.FastTrackSolarPVInitiatives2022aimstoproduce10,000megawatts(MW)of

electricitythroughsolarenergyprojects:i)

substitutionofexpensiveimportedfossil

fuelswithsolarPVii)SolarPVgenerationon11VKfeeders,andiii)solarisationofpublicbuildings.

ThebiggestchallengesinPakistan’senergytransition

ambitionsincludeacirculardebtproblemand

constraintsinREdevelopment.BasedonNational

ElectricPowerRegulatoryAuthority,Pakistan’s

(NEPRA)StateofIndustryReportof2022,the

distributioncompanies(DISCO)receivablesclimbed

fromRs.1,398,194million(USD489mn)to

Rs.1,680,426million(USD587.1mn),worseningthe

issueonthecountry’spowersectorcirculardebt.The

paymentdelaysinPakistan'sindependentpower

plantshavecausedfinancialdistress.Sinohydro,a

ChineseCFPPowner,issuedadefaultwarningtothe

governmentinMay2023.DespitePakistan’starget

REintheenergymix,there’snoclearroadmapor

commercialsupport(e.g.FITorauctions)to

encouragemoreinvestmentsinRE.Additionally,

investmentsingridinfrastructureareneededto

accommodatevariableRE.

10

3.Keyobjectivesandmethodology

Thisstudywasconductedwiththefollowingobjectives:

.ToprovideapathwayforacceleratingChina’sinternationaltransitionfromcoal-basedpowergenerationtoREbyleveragingChinaSOEs;

.ToevaluatefinancialmechanismsthatcapitaliseontheuniquefeaturesofChinaSOEstooffer

transitionFinance;and

.TopresentfindingstothepublicandChinaSOEsonthepotentialfinancialmechanismstoexploreearlyCFPPretirementforPakistan