China-Pakistan Nuclear Deal Raises Concerns: Implications for Energy Crisis and Nuclear Commerce

China and Pakistan recently signed a significant agreement on June 20th to construct a 1,200 MW nuclear power plant at the Chashma nuclear complex in Pakistan. The deal, valued at $4.8 billion, has emerged as a crucial development in light of Pakistan's ongoing energy and economic crises. This nuclear agreement not only holds implications for Pakistan but also raises concerns about the global governance of nuclear commerce. Of particular note is China's decision to proceed with the deal without obtaining necessary waivers from the Nuclear Suppliers Group (NSG). The latest deal involves the construction of the fifth reactor, known as C-5, at the Chashma nuclear complex. 

Although specific financial details have not been disclosed, Pakistan's Prime Minister, Shehbaz Sharif, mentioned that China has provided "special concessions" to finance the project, considering Pakistan's financial crisis and its ongoing negotiations for an International Monetary Fund (IMF) bailout. C-5 will be the largest reactor at the Chashma complex, where China has already constructed four phases with four reactors of approximately 325 MW each. The reactor will utilize China's Hualong One reactor, which has already been deployed in two plants in Karachi. China has previously built six nuclear plants for Pakistan.

The Chashma complex houses four smaller reactors, while the Karachi Nuclear Power Plant (KANUPP) operates two reactors. Pakistan's oldest reactor, KANUPP-1, which was constructed by Canada, has been decommissioned. KANUPP-2 and KANUPP-3 employ 1,100 MW Chinese Hualong One reactors. KANUPP-3, with a substantial investment of $2.7 billion, became fully operational in the past year and has been lauded by Prime Minister Sharif for alleviating Pakistan's energy crisis. The agreement for KANUPP-3 was signed in 2013, coinciding with Chinese President Xi Jinping's introduction of the Belt and Road Initiative (BRI).

The project subsequently became a prominent energy venture within the China Pakistan Economic Corridor (CPEC) of the BRI. Pakistan's Ministry of Energy has emphasized the urgent need to increase the proportion of renewable and nuclear energy due to the country's persistent energy deficit, financial crisis, and escalating import bills. The 2021-2022 Economic Survey highlighted Pakistan's heavy dependence on imported fuel, including oil and liquefied natural gas (LNG), which has contributed to a widening trade deficit and external sector pressures. To address these challenges, Pakistan unveiled the Alternative and Renewable Energy Policy in 2019, aiming to achieve a 30% share of renewables in the energy mix by 2030. Currently, thermal sources account for 61%, hydropower 24%, nuclear power 12%, and wind and solar combined only 3% of the energy mix. The survey also noted a 39% annual increase in the gross capacity of nuclear plants, reaching 3,530 MW. China's civilian nuclear projects with Pakistan have drawn scrutiny due to the Nuclear Suppliers Group's regulations.

The NSG comprises nuclear supplier countries dedicated to non-proliferation efforts through the implementation of guidelines for nuclear and nuclear-related exports. The NSG explicitly prohibits its members from transferring nuclear technology to countries that have not signed the nuclear Non-Proliferation Treaty (NPT). China joined the NSG in 2004 and has argued that the Chashma 3 and Chashma 4 reactors were "grandfathered" under pre-existing deals with Pakistan predating China's NSG membership. Chinese analysts have sought to justify ongoing nuclear commerce with Pakistan, despite the NSG commitments, by citing the India-U.S. nuclear deal. However, significant distinctions exist between the two cases.

The India-U.S. deal required a waiver from the NSG, which was granted in 2008, allowing India's entry into the global nuclear commerce arena. India, in turn, made several commitments, such as placing facilities under the International Atomic Energy Agency (IAEA) safeguards, segregating civilian and military nuclear programs, and maintaining a testing moratorium. China, on the other hand, has not sought a similar waiver from the NSG, and Pakistan has not made comparable commitments. China has suggested that having the reactors under IAEA safeguards should suffice. Although China previously justified its C-4 and C-5 deals as part of earlier agreements, the agreements for KANUPP-2 and KANUPP-3 were reached in 2013, a decade after its NSG membership. Concurrently, efforts to include India as a full-fledged NSG member have encountered obstacles, including Chinese opposition.

The intertwining of India and Pakistan's aspirations for NSG membership has hindered progress. Experts express concerns that these recent deals further undermine the global rules governing nuclear commerce and raise questions about the future of the NSG and the governance of global nuclear trade. In conclusion, the China-Pakistan nuclear power plant agreement at the Chashma complex has significant implications for both countries and the global nuclear commerce landscape.

Pakistan's energy crisis and financial challenges have prompted the need for increased reliance on renewables and nuclear energy. However, China's pursuit of these projects without obtaining the required waivers from the NSG has raised concerns about the enforcement and relevance of existing regulations. The comparison with the India-U.S. nuclear deal highlights the divergent paths taken by the two countries. As such, these developments have ignited discussions about the governance of global nuclear commerce and the role of the NSG in shaping future interactions.