CPEC challenges
Certain issues need to be streamlined
The China Pakistan Economic Corridor, a 46 billion dollar project of regional connectivity, has entered the implementation stage and the dream of making Pakistan an economic hub is materialising fast but some macro issues need to be streamlined to reap full benefits of the massive opportunity.
According to data of Ministry of Planning and reforms, out of US $46 billion, the major portion of $34.413US billion has been allocated for energy sector, $3.690 billion for railways, $6.100 billion for Roads, $793 million for Gwader, and $44 million for optic fiber.
According to Ministry of Planning data, 16 energy projects have been placed on priority. Energy priority projects include Port Qasim Electric Company project of 1,320 MW worth $ 1,980 million, Sahiwal 2x660MW Coal-Fired Power Plant of 1320 MW worth $ 1,600 million, Engro Thar project of 1320 MW worth $ 2,000 million, Surface Mine in Block II of Thar project worth $1470 million and Gawadar Coal Power Project of 300 MW worth $360 million.
Quaid-i-Azam Solar Park Bahawalpur of 1,000MW is worth $1,350 million, Dawood 50MW wind Farm, Bhambore, Sindh of 50 MW is worth $125 million and UEP 100MW wind Farm, Jhimpir, Sindh is worth $250 million. Sachal 50MW Wind Farm, Jhimpir is worth $134 million and Sunnec 50MW wind Farm Jhimpir is $ 125 million, Suki Kinari Hydropower Station in KPK is 870 MW worth $ 1,802 million and Karot Hydropower Station in AJK & Punjab is 720 MW worth $ 1,420 million.
Matiari to Lahore Transmission line worth $1,500 million and Matiari to Faisalabad Transmission line with estimated cost of $1,500 million are also placed under priority. Eight power projects have been marked as actively promoted projects including 1320 MW Gaddani Power Park Project with estimated cost of $3,960 and $1,200 million, HUBCO Coal Power Plant of 660 MW worth $ 970 million, 300 MW Salt Range Mine Mouth Power Project including mining worth $800 million, 1100 MW Kohala Hydel Project in AJK is worth $ 2,397 million, Pakistan Wind Farm II 2X50 MW(Jhampir, Thaa, Sindh) is worth $150 million, 1320 MW Thar Mine worth $ 1,300 million, 1,320 MW Muzaffargarh Coal Power Project worth 1,600 and 525 MW Gas Power Plant will cost $550 million.
There are eight projects related to Gwader Port including Eastbay Expressway with estimated cost of $140.60 million, Gwadar International Airport, Construction of Breakwaters with $123.00 million, Dredging of berthing areas and channels with $ 27.00 million and infrastructure for Free Zone and EPZs port related industries with $32.00 million.
Necessary Facilities of Fresh Water Treatment and Supply will complete with $130.00 million, Hospital at Gwadar with $100.00 million and Technical and Vocational Institute at Gwadar with $10.00 million. According to official data, all the 24 energy projects of 17,045 MW worth $34413 million have been placed under IPP mode. An independent power producer owns facilities to generate electric power for sale to end users.
Under IPP projects, the investor companies will build the projects and get back their investments by selling power to consumers. According to Ministry of Shipping and ports three projects are underway at Gwadar. According to Ministry of Port and Shipping, the affairs of port have been managed by China Overseas Ports Holding Company and it is carrying out all development work with the help of five affiliated companies.
It will create tremendous job opportunities for the locals. Most of the CPEC projects are awarded by Chinese government to Chinese companies after bidding. With the start of development many companies have approached to set up factories and mills in the Gwadar free zone area and the interested include Chinese giants.
“There are two major challenges we are facing at Gwadar, one water and second gas, and we are trying hard to arrange water from nearby dams and power will be initially arranged by electricity import from Iran,” an official said. “In order to make Gwadar attractive for foreign companies’ water gas and power issues need to be resolved on priority basis.”
Special Communication Organisation (SCO), an Army wing working under IT Ministry, is executing Pak-China Optical Fiber Cable Project under the first ever cross border direct interconnectivity between the two countries. With the assistance of Chinese company, Huawei SCO is executing the project for laying approximately 820 kilometers of OFC from Rawalpindi to Khunjerab backed up by a high capacity microwave link.
It was learnt that many road projects have also been initiated by FWO, an affiliated department of Pakistan Army and other departments.
The interviews with officials of the ministries of planning, port and shipping, foreign affairs revealed that no government has consolidated record of CPEC projects. The terms and conditions were set by implementing departments. Even the State Bank has no data how much money actually poured into the country and on what conditions.
“Initiatives under CPEC include several projects in key areas like connectivity, energy, information network infrastructure, industry and industrial parks, and agricultural development projects. Impact of CPEC could be noticed from the inflow of FDI from China as well as import of machinery during the past couple of years and we expect it to become more visible in near future,” said the spokesman of State Bank.
According to official data, the foreign direct investment from China stood at $606 million during fiscal year 2016. In 2015 FDI from China was $256.8 million. Import payments to china for machinery and mechanical appliances during 2015 were $2,358,251,408 whereas in 2016 it increased to $2,647,679,133.
One of the CPEC project has been funded by Asian Infrastructure Investment Bank. “AIIB approved a loan of $100 million for the National Motorway M-4 (Shorkot-Khanewal Section) Project on June 24, 2016. The National Highway Authority of Pakistan is the project executing agency and project implementation period is from June 2016 to June 2020,” as per State Bank documents.
According to AIIB terms and conditions, the loan of USD100 million will have a 20-year term (including a grace period of 5 years) at AIIB’s standard interest rate for sovereign loans with an average maturity of 12.75 years, a commitment charge of 0.25% per year, a front-end fee of 0.25%, and a semi-annual equal amortisation scheme.
The loans obtained from commercial institutions or even China need to be paid on time. CPEC is a tiny part of China’s dream to revive an ancient trading route stretching from Asia to Europe.
Comments
Post a Comment