ISLAMABAD: Pakistan has begun construction of a $3.5 billion Chinese-designed nuclear energy project, which would produce 1,200 megawatts of electricity, Prime Minister Shehbaz Sharif said on Monday.

Pakistan and China are longtime allies. Beijing is building roads, bridges, power plants, and railways under the China-Pakistan Economic Corridor (CPEC), part of President Xi Jinping’s Belt and Road Initiative, to link its far west with the

Chinese-built Gwadar port on the Indian Ocean in Pakistan’s Balochistan.

The nuclear power plant, known as Chashma-5, is being constructed at a site along the left embankment of the fast-flowing Indus River in Mianwali, a district in the eastern Punjab province. The site is already home to four Chinese-supplied nuclear power plants that were built in recent decades.

In a post on X, Sharif said the Chashma-5 nuclear power plant was another “milestone” in strategic cooperation between the two friendly countries.

“Commencement of construction of the most modern and the biggest, C-5 Nuclear Power Plant is another milestone in strategic cooperation between Pakistan and China. The plant will contribute 1200 MW electricity,” Sharif said.

“I congratulate PAEC (Pakistan Atomic Energy Commission) and CNNC on this remarkable achievement.”

The development comes as Pakistan, which has one of the highest electricity tariffs in the region, is making preparations to stop capacity payments to independent power producers (IPPs), and PM Sharif’s cabinet this month approved settlement agreements with eight bagasse-based IPPs, with the aim to reduce electricity prices and save the national exchequer billions of rupees.

High cost of power is one of the key factors that leads to inflation in the South Asian country.

Pakistan has also been holding talks on reprofiling power sector debt owed to China and structural reforms, but progress has been slow. It has also vowed to stop power sector subsidies.