China is continuing efforts to improve its relationship with its neighbor Pakistan. Reuters is reporting that China National Nuclear Cooperation (CNNC) has committed to a loan of at least $6.5 billion to finance the construction of a nuclear reactor in Karachi. Although CNNC would not comment, two employees of the Pakistani government’s energy ministry and other sources with knowledge of the deal confirmed that loan documents had been signed. China also agreed to waive the $250,000 insurance premium on the loan, the sources reported.

Pakistan china

Pakistan and China have been close allies since the 1960s, and China is definitely interested in maintaining the relationship. Both countries are wary of nuclear-armed and rapidly growing India.

Statement from Pakistan Atomic Energy Commission

“China has complete confidence in Pakistan’s capacity to run a nuclear power plant with all checks in place,” said Ansar Parvez, chairman of the Pakistan Atomic Energy Commission, in a statement.

Although Parvez did not provide more details regarding the loan, he did say the $9.59 billion twin reactors would be operational by 2019, and that each of the two reactors would produce more power than all the nuclear reactors now operating in Pakistan.

Pakistani power woes

Pakistan has suffered from power shortages for decades. Currently Pakistan only generates about 11,000 MW of power, while total demand for electrical power typically exceeds 15,000 MW.

Hours-long blackouts are common in some areas, and sparked a number of protests, further damaging an economy plagued by chronically high unemployment and endemic poverty.

Not surprisingly, Pakistan views nuclear energy as critical in coming to terms with the power shortages. Pakistan’s long-term energy plan looks to generate more than 40,000 MW of nuclear energy by 2050.

China’s assistance with other Pakistani nuclear power projects

China has assisted Pakistan with other nuclear projects in the past. The two nuclear reactors at the Chashma nuclear plant in Pakistan’s Punjab region were built using Chinese technology, and both of the smaller reactor projects currently underway in Pakistan involve partnerships with Chinese concerns.

The U.S. relationship with Pakistan on the subject of nuclear power was severely damaged in 2004 when Pakistani nuclear scientist Abdul Qadeer Khan admitted that he had illegally transferred sensitive nuclear technology to North Korea, Iran and Iraq.