China Pakistan Economic Corridor: Where CPEC Stands Now?
CPEC planned seven major road and rail projects out of which only a smaller stretch of Multan-Sukkur road could be completed.
Today after spending more than its original budgeted cost, CPEC is struggling to complete even 25% of the planned projects. Chinese leaders and lenders were very wise. They first completed the projects where flow of money was guaranteed and their return of Investment (ROI) was assured. Wherever ROI was slow, projects could not even start while their cost is being escalated with each passing day. Let us analyse them one by one.
1. Power Projects- Since Power projects were to deliver money at the earliest, Chinese companies moved fast. Total 23 power projects were planned which were all Coal Fired. Out of these 23, 16 have already been completed and running. In these 16 completed Power Projects, Chinese Banks have invested about 55 Billion PKR and within 4 years have achieved profits of more than 450 Billion PKR at an average cumulative rate of more than 70% every year. To benefit these Chinese Power producers, Pakistan’s National Electric Power Regulation Authority (NEPRA) has increased the electricity tariff 19 times in year 2020 and today the same is more than 25 per unit for residential purposes. I would like to mention the point here that as per the agreement between Pakistan Government and Chinese Companies, NEPRA is legally bound to buy 100% electricity generated by these plants. And if it does not do it, penalties will be massive.
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2. Road & Rail Projects- CPEC planned seven major road and rail projects out of which only a smaller stretch of Multan-Sukkur road could be completed. All the 3 major rail projects (ML-1, ML-2 and ML-3) and 2 road projects (Western Alignment and Eastern Alignment) are on hold while only few stretches of Karakoram Highway are under construction. There are massive cost overruns in Lahore Metro where the feasibility of the entire project is at stake now. Recently, Pakistan approached Chinese lenders again to obtain some commercial loan at a whooping interest rate for moving ahead in this direction.
3. Special Economic Zones- Pakistan planned Nine Special Economic Zones all along the CPEC which promised employment to several millions of Pakistani youth and painted a very rosy picture of prosperity. Today, eight out of these nine SEZs planned in Gilgit, Mohmand, Rashakai, Islamabad, Mirpur, Bostan, Dhabeji and Port Qassim are awaiting start of work. Some construction is under way in only Faisalabad SEZ which is also stuck up due to lack of funds. Not even a single factory has come up in these SEZs and it is estimated that with current financial situation in Pakistan, none of the nine will ever materialise.
4. Gwadar Port Zone- With lots of ambitions, China started developing Gwadar Special Port Zone. Today they are struggling to cope up with the work while less than 20% of the work is completed. Work for the airport started with much fanfare but it has stopped for more than two years. This airport was to be completed in 2017 but it is still a dirt strip where only turboprop aircrafts can land. There is not even a single manufacturing facility functional till in the entire Gwadar Special Economic Zone. The Road projects within the port area are moving very slow, Rail projects have not yet started, and the construction of berths is in doldrums. There was no significant shipping traffic observed for more than a year, however, the only progress seen here is the construction of infrastructure for Chinese Navy and dumping of warlike stores which is a matter of concern too. Gwadar was planned to be a commercial port which is slowly turning into a Chinese Naval Base.
In a nutshell, we have significant reasons to believe that except early harvest projects, all other CPEC projects are far from reality. They were planned to contribute significantly to Pakistani Economy but at present contributing a massive addition in Pakistan’s National Debts due to repeated cost escalations and delayed timelines.
(Major Amit Bansal is is a Defence Strategist with keen interests in International Relations and Internal Security. He is also an author, blogger and poet.)
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