Link is in first page, OP.
This is exactly what I was saying: read the first bolded line. Pakistan isn't doing anything, they've outsourced the entire thing to the Chinese (from finding financing to getting it financed and all the way to management) so they'll have to recover profit, usually around of below 20-25%. In this case, its 17%, If funding came from Pakistan or a third party approved it for Pakistan, the Tariff would be cheaper as the "risk" is shared.
In the US, Europe or Japan, etc, when GE and others take high risk projects, outside of the traditional profitability, a "contingency" of 20 to 25% is added by default. Same is true across the globe.
IMO, this is actually a great deal, no risk and only 17% return for a few years and even that reduces down long term AND 72 months (7 years) of grace period which is HUGE. You usually get 2-3 years tops and the loan is due back in 3, 5, 7 or 10 years max.
Here's the main content from the OP:
CWE of China is required to construct the project on build, own, operate and transfer (BOOT) basis.
Under the agreement, the average tariff for first 12 years has been set at 8.9 cents per unit which would come down to 5.1 cents per unit for next 18 years. The average tariff for 30-year life of the project works out at 7.9 cents per unit.
It ensures 17 per cent return on equity on internal rate of return basis.
The tariff has been finalised on the assurance of the Chinese government that the contractor would get lending from foreign financial institutions for a period of 18 years inclusive of 72-month grace period at interest rate of six-month London Interbank Offered Rate (Libor) plus 4.75pc.
Sir, the INSTALLED generation capacity is over 21,000MW according to the CIA. You keep confusing power generated with the installed capacity, because you cannot seem to accept what I said earlier - the problem is in the distribution and billing, not on the power generating side:
Pakistan Energy 2014, CIA World Factbook
Electricity - installed generating capacity:
22.27 million kW (2010 est.)
country comparison to the world: 36
Ok....we are gong in circles. Please see the above:
1) Installed "generating capacity"...doesn't mean that the infrastructure is READY to produce 22,000 MW. It means that there is "capacity" to go to that level. Usually means additional expansions have to be made to get there from below 12,000 MW current generating ability.
For example, the -16 fighter jets (an example since this is a defense forum) have the installed capacity to use BVR munitions. But what does it mean for a Block 15 plane (in PAF's case)? It means you have to go through the MLU process and upgrade its systems and some structures.
Similarly, the infrastructure was initially designed to consider expansion up to 22,000 MW in mind. Can it do it today? NO. It needs expansion projects to happen (more generators, equipment and all), which won't make sense as it is VERY expensive. The government is spending that money on Hydro projects which is the best option from ALL sides.
Last but not least....these estimates are from 2010 AND these are "estimates" (see where it says 2010 est.). Meaning its not accurate either. Remember, these numbers come from government bodies in countries like Pakistan (WAPDA is a government organization). So, different government's can lie about this for political reasons. You should keep that in mind.