- The CPEC is there, while US proposals of aid aren’t
The China Pakistan Economic Corridor (CPEC) is the hope of the region for a better future with peace, development and economic growth. As the year 2019 ends, CPEC, the flagship of the Belt and Road Initiative (BRI), showed progress which merits a review. CPEC is a major platform for comprehensive and substantive cooperation between China and Pakistan and is an important consensus reached by the two countries.
In May 2013, Chinese Premier Li Keqiang proposed the CPEC initiative during his visit to Pakistan, while President Xi Jinping, in his April 2015 visit, signed the agreement for a “1+4” pattern of economic cooperation, featuring a central role for the CPEC and four key areas including the Gwadar port, energy, transportation infrastructure and industrial cooperation, so as to achieve win-win results and common development. Both sides agreed on the principles of scientific planning, step-by-step implementation, consensus through consultation, mutual benefit and win-win results, as well as ensuring quality, safety, and environmental protection. During Prime Minister Imran Khan’s maiden visit to China, the two sides reaffirmed their complete consensus on the future trajectory of the CPEC, timely completion of its ongoing projects and joint efforts for realization of its full potential with a focus on socioeconomic development, job creation and livelihoods and accelerating cooperation in industrial development, industrial parks and agriculture.
There has been much misreporting about CPEC being a debt trap. Nothing could be further from the truth
An overview of the mega project reveals that over the past 6 years, under CPEC, 11 projects have reached fruition, 11 are under construction. The total investment of the 22 projects is around 18.9 billion USD, with 20 more projects in the pipeline.
For the execution of CPEC, both countries have set up a ministerial-level Joint Cooperation Committee on CPEC Long Term Planning (JCC). There are 7 joint working groups (JWG) under JCC, namely Planning, energy, transportation infrastructure, Gwadar port, industrial cooperation, social economic development and international cooperation. JCC is responsible for overall planning and coordination under CPEC, while the JWGs are responsible for the detailed planning and implementation of the projects. The two secretariats are responsible for communicating and coordinating with the line ministries related to the projects of CPEC. Until now, the JCC has convened nine meetings and since 2015 they are held on an annual basis. The ninth meeting was held in Islamabad on 5 November 2019.
The major avenues of focus of CPEC include Energy, Infrastructure, Gwadar Port and Industrial Cooperation. Energy is the driving force for economic development and a key factor to ease load-shedding and improve the lives of millions of people. Fifteen energy projects, highlighted as the priority sector under the CPEC framework, are planned as a priority with a total generation capacity of 11,110MW, among which seven have been completed and are in operation while eight are under construction with a total capacity of 6,910MW. At present, Zonergy 300MW Solar Park, 50MW Dawood Wind Farm, Jhimpir UEP wind power project, Sachal 50MW Wind Farm, Sahiwal 2×660MW Coal-fired Power Plant, Port Qasim 2×660MW Coal-fired Power Plant and Three Gorges Second and Third Wind Power Projects have been completed. These projects have added 3240 MW to the Pakistani national grid, amounting to more than 11% of the total installed capacity of 29,000 MW in Pakistan. The project also includes alternate energy sources, while the total package is aimed at providing affordable energy to Pakistani consumers in a diversified manner.
In the infrastructure section, an efficient transportation network is key to economic development. Currently, KKH Phase-II (Havelian-Thakot section), Karachi-Lahore Motorway (Sukkur-Multan section) and Lahore Orange Line are three projects under construction. The information highway for laying of optical fibre cable (OFC) from Rawalpindi to Khunjerab is in operation. These ongoing projects are funded by preferential loans from the Chinese government at an interest rate of two percent interest rate with a total amount of $5.874 billion. The upgradation of ML1 railway and the KCR are under discussion.
According to an agreement between China Overseas Ports Holding Company (COPHC), Gwadar Port Authority (GPA) and Singapore Port Authority in 2013, the development and operation of Gwadar Free Zone was handed over to the COPHC. Up to now, COPHC has invested $250 million in the port renovation. Five new quay cranes, a 100,000m2 storage yard, a seawater desalination plant with a capacity of 220,000-gallons pure water/day, two sets of sewage disposal systems and cargo handling equipment have been installed and 80,000m2 green space has been added to the port area. 400,000 tons of cargo have been handled by Gwadar Port in 2017.
The Gwadar Free Zone is in the northern part of Gwadar, about 7km away from the port. The planned development period is from 2015 to 2030 and is divided into four phases.
The Gwadar East Bay Expressway was agreed by China and Pakistan during President Xi’s 2015 visit. The project’s EPC contract was signed in September and construction commenced in November 2017. The construction period is 36 months with the designed speed of 100 kilometers per hour, being implemented by the China Communications and Construction Company (CCCC). After inauguration, the project will become the main channel for the cargo distribution of Gwadar Port and a vital communication line to connect the Free Zone in Gwadar’s southern and northern areas.
As for industrial development, the federal government and each province have attached paramount importance to the construction of SEZs. The work has been in progress with the joint efforts of both sides.
The mega-project tries to create job opportunities and social responsibility. According to preliminary statistics, CPEC projects have created more than 75,000 direct jobs for Pakistanis. To promote Pakistan’s economic development and employment, Chinese companies also subcontract many projects to local Pakistani companies. This also develops relevant upstream and downstream industries, such as raw material processing, catering industry which also provide more employment opportunities for local people.
China and Pakistan signed the Long-Term Plan at the 7th JCC after obtaining the consent of both federal and all provincial governments. The plan provided the macro-guidance for implementation of CPEC in the next phase, which could be adjusted based on the real situation as well as the consensus between the two parties in implementation in future.
There has been much misreporting about CPEC being a debt trap. Nothing could be further from the truth. The Chinese Government provided Pakistan concessional loans of $5.874 billion for major transportation infrastructure projects, with a composite interest of around 2 percent with repayment in 20-25 years. The Pakistani government provides sovereign guarantees with repayment starting from 2021. Chinese companies and their partners invested $ 12.8 billion in energy projects in Pakistan. Among them, Chinese companies provide $3 billion from their own equity. The remaining $9.8 billion is raised from commercial banks at about 5 percent. The repayment period is 12-18 years.
All the CPEC energy projects are investments in nature, which is independent business behaviour by these companies. China provides interest-free loans for Expressway East Bay in Gwadar and grant for some livelihood projects. Pakistan provided funding for the feasibility study of ML-1 upgradation. Therefore, Pakistan will repay only $ 6.017 billion (Category I $5.874 billion and Category III $ 0143 billion) and their interests to China. China and Pakistan are discussing how to use Chinese grants to implement new projects such as the new Gwadar international airport, Gwadar vocational training centre and friendship hospital.
This scribe called on Syed Fakhar Imam, Chairman Kashmir Committee and asked for his opinion on the progress on CPEC, especially in the Kashmir region. He expressed satisfaction. When asked if the tense situation in Indian Kashmir is affecting the progress on CPEC, his answer was that everything was under control. I asked him about US Assistant Secretary of State Alice Wells’ negative comments about CPEC. He said that the Chinese Ambassador, Chinese Foreign Ministry Spokesperson and Pakistani Foreign Minister had all refuted it. His opinion was that the USA had offered assistance but there were no concrete proposals from the USA, unlike China’s strong support.
