By Mehtab Haider –
Huge Chinese investments in Pakistan must be handled with care and transparency by the PML-N regime to convert the opportunity into prosperity
Attached with stringent conditions, China has agreed to execute $45.6 billion projects in Pakistan mainly in areas of energy and infrastructure. The stringent conditionalities include obtaining guarantee from Pakistan that revolving fund will be established to avoid piling up of monster of circular debt in energy sector projects where Chinese will execute projects mainly on pattern of Independent Power Producers (IPPs).
Having guarantee of over 20 percent dollar denominated returns on making investment in energy specific projects China is ready to undertake multibillion projects that would help Islamabad to overcome torturous load shedding.
But there is gap between the cup and lips and Islamabad will have to do a lot to materialize these projects on ground as so far all these huge investments lie on papers which seem beautiful but making them a reality is still a far cry.
The ruling PML (N) ministers say that keeping in view overall investment scenario no other country and its investors are ready to come to Pakistan so the choices are limited despite having liberal regime placed in Pakistan.
Coupled with tough conditions, the transparency in dealing with China will be big question mark for the ruling elites here in Pakistan as the masses will be looking towards them to ascertain whether the rulers or their cronies will become major beneficiaries of these wheeling and dealings or merit on the basis of transparency will set the rules of game to finalize multibillion dollars deals in months and years ahead.
Although, Islamabad’s experience in dealing with China in terms of trade has never remained smooth keeping in view precedent of Chinese engines for Railways or in case of dumping goods inside the country at cost of our own manufactured products, the PML (N) led regime claimed it as silver line for Pakistan’s future prospects that can change the fate of this country by receiving over $45 billion largely through joint ventures by Chinese and Pakistanis counterparts.
According to break-up of total $45.6 billion, Beijing will be providing $34 billion through IPP mode through joint ventures while remaining $11billion will be provided in shape of loans.
China will be providing $15.506 billion for generating priority projects of energy sector in phase one, another $18.287 billion for same energy projects in second phase, construction of 832 kilometer roads with estimated cost of $5.9 billion including assisting Pakistan for construction of Lahore-Karachi Motorway, upgrading rail links of 1736 kilometer with cost of $3.690 billion, development of Gawadar including establishing sea, air and road links with cost of $662 million, Orange Line in Lahore with cost of $1.6 billion and establishing cross border optic fibre with $44 million.
China is ready to assist Pakistan for generating 16,400 megawatt electricity in two phases from 2014 to 2025 by investing $34 billion through IPP mode where the government would only guarantee Power Purchase Agreement (PPA) on produced power.
Under China Pakistan Economic Corridor (CPEC), Pakistan would generate 10, 400 MW electricity in first phase with estimated cost of $15.506 billion while in second phase the electricity would be generated to the tune of 6645 MW with cost of $18.287 billion.
For prioritized projects of generating 10,400 MW electricity, the country will generate 1320 MW through Port Qasim Electric Power Company, Engro Thar coal fired power project 660 MW, two Thar Coal project block-1 1320 MW, Gawadar Coal Project 300 MW, Rahimyar Khan coal project 1320 MW, Muzzaffar Garh coal project 1320 MW, Sahiwal power plan 1320 MW, Suki Kinari power project located in KPK for generating 870 MW, Karot Hydropower project 720 MW, 250 MW through wind projects and 1000 MW through Quaid-e-Azam solar projects.
The remaining $11 billion will be provided by China in shape of loans for other China-Pakistan Economic Corridor (CPEC) projects. Pakistan would invest $5.9 billion on 837 kilometer road infrastructure projects through up gradation of Karakorum Highway (KKH) and construction of Lahore-Karachi motorway.
For Railway projects, the CPEC would utilize $3.690 billion on up gradation of 1736 km rail links and establishing dry port at Havelian and linkages between Kunjrab, Gawadar and other parts of the country.
With cost of $660 million for development of Gawadar under CPEC, new airport at Gawadar and Eastbay expressway will be constructed. The Technical and Vocational Training Center at Gawadar will be established and one hospital will also be built with state of the art facilities. Under Gawadar development plan, infrastructure for free zone and EPZs port related industries will be established at Gawadar and Marine works at Gawadar port will also be put in place.
On Orange Line project under CPEC, there would be investment of $1.6 billion to construct rail mass transit in Lahore.
All these projects present a rosy picture but Pakistan will have to simplify its procedures without compromising element of transparency can make these dreamy projects into a reality otherwise these tall claims and promises would remain unfulfilled again this time.
The writer is a senior economic correspondent based in Islamabad