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Pakistan, China agree to make 2019 a year of economic cooperation under CPEC

Source: The News

Date: 15th Jan, 2019

ISLAMABAD: Chinese Ambassador in Islamabad Yao Jing called on Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar on Tuesday.

During the meeting, matters of mutual interest including progress on China Pakistan Economic Corridor projects came under discussion.

Ambassador Yao Jing appreciated that 8th Joint Cooperation Committee (JCC) meeting held successfully in a cordial atmosphere where all deliverables were achieved and the scope of the cooperation was expanded to new avenues.

Both sides agreed to expedite work by promoting joint ventures and export led growth under CPEC by declaring 2019 as “year of industrial, socioeconomic and agriculture cooperation”.

Minister for Planning, Development & Reform, Makhdum Khusro Bakhtyar said that the MoU on Industrial Cooperation, signed during 8th JCC, provides a framework to promote communication on key industries such as textile, petro-chemical and iron & steel, encourages Chinese investors to relocate and explore opportunities of investment in Pakistan.

The minister highlighted that Pakistan can become an ideal destination for investment in different sectors. He said that Ministry of Planning would facilitate Chinese investors looking for opportunities under CPEC and create a pull effect.

He highlighted that government is working on policies that will improve ease of doing business in early time frame. Minister said that the first meeting of the JWG on Socio economic development was a major milestone and the action plan discussed therein will support uplift of less developed area.

Pakistan side has already forwarded invitation letter to China for visit of the expert team.

“Both side to work out for speedy implementation of initiatives in already identified six areas including agriculture, education, medical treatment, poverty alleviation, water supply and vocational training projects” he intimated.

The minister hoped that JWG on Agriculture meeting, scheduled for 15th February this year, would provide an opportunity to broaden CPEC Cooperation.

He emphasized that Chinese investors should explore investment opportunities in agriculture sector of Pakistan for input supplies as well as food production, processing, logistics, marketing and exports in a vertically integrated way on their own or in joint ventures (B2B) with Pakistani companies.

Both sides agreed to ensure that this year Gwadar Projects such as New International Airport, Hospital and Vocational Institutes will hit ground within three months as these projects are beneficial for the local population and will therefore gain the support and trust of the local population.

 Ambassador Yao Jing appreciated the efforts of Government of Pakistan for facilitating Chinese investors and informed that a large number of Chinese investors would visit Pakistan soon that would further strengthen the bonds of economic and bilateral cooperation.

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NAB signs MoU with China to oversee CPEC projects

Source: Pakistan Today

Date: 6th January 2019

ISLAMABAD: National Accountability Bureau (NAB) Chairman Justice (r) Javed Iqbal on Sunday said that the anti-graft watchdog has signed a memorandum of understanding (MoU) with China to oversee China-Pakistan Economic Corridor (CPEC) projects being completed in Pakistan.

He said that considering corruption as cancer, NAB has chalked out a comprehensive National Anti-Corruption Strategy for logical conclusion of mega corruption white collar crimes cases by adopting the policy of ‘Accountability for All’ as the figures of complaints, inquiries and investigations are almost double as compared to the figures of the period between 2017 to 2018. The comparative figures for the last one year from October 2017 to December 2018 are indicative of hard work being put in by all ranks of NAB officers in an atmosphere of renewed energy and dynamism, where the fight against corruption is being taken as a national duty, he added.

He said that NAB is committed to rooting out corruption in all its forms and manifestations across the board with iron hands. He said that NAB has established a state-of-the-art forensic science lab in Islamabad which has facilities of digital forensics, questioned documents and fingerprint analysis which will be utilised for further improvements in the quality of inquiries and investigations. The NAB chief said that due to the prescribed timeline of 10 months for efficient, effective and expeditious disposal of cases from complaint verification-to-inquiry-to-investigation and finally to a reference in the accountability court, NAB has filed 440 corruption references from October 2017 to September 2018 which is a record achievement.

He said that NAB has introduced a new concept of Combine Investigation Team (CIT) in order to benefit from the experience and collective wisdom of senior supervisory officers, hence a system of CIT comprising of a director, additional director, investigation officer and a senior legal counsel has been put in place. This is not only lending quality to the work but also ensuring that no single individual can influence the official proceedings of NAB. He also said that NAB has signed MOU with China to oversee CPEC projects being completed in Pakistan.

He said that Transparency International (TI), PILDAT, Mishal, Gillani and Gallop survey and World Economic Forum have appreciated NAB’s efforts in the eradication of corruption. NAB, in a very short span of time, has established over 50,000 character-building societies in universities/colleges to create awareness against corruption which has proved very successful and now the young generation is aware of the ill effects of corruption and has joined hands with NAB to eradicate corruption from the country.

On September 25, Pakistan and China inked a MoU to work jointly for ensuring transparency in CPEC. Justice (r) Iqbal had said that NAB is playing a vital role in recovering looted money from culprits, adding that since October 2017, the organisation had recovered billions of rupees.

On July 10, the NAB chief had said that the bureau would continue to play its role for saving CPEC and other important development projects from corruption. Presiding over a meeting of Balochistan NAB, he had said that development of Balochistan was a guarantee of Pakistan’s development and prosperity.

During the meeting, Justice (r) Iqbal was briefed on the performance of Balochistan NAB. The meeting had also discussed various issues regarding action against corruption in the province. Justice (r) Iqbal had said that CPEC had not only great importance for the development and prosperity of Pakistan, but it was also a game-changer project for the entire region. He had said that NAB was playing its due role in eliminating corruption from the country and would continue to do so.

Prime Minister Imran Khan invites Turkish investors to join CPEC

Source: The News

Date: 4th January 2019

ANKARA: Prime Minister Imran Khan,  who is on his first official two-day visit to  Turkey, on Thursday said   that  it’s time for Islamabad and Ankara to take their bilateral trade to a higher level, citing Pakistan’s ideal geo-strategic location and its huge potential for investment in infrastructure and tourism.

Addressing a business forum of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) in Ankara on Thursday night, he said his government will provide all possible assistance  and support to the Turkish investors in Pakistan, Khan said that Pakistan is a virgin territory as a lot of trade areas have not been exploited yet, adding that  huge reserves of oil, gas, copper, coal and other admirals are yet to be unexplored.

He said tremendous trade and economic activities will start due to China-Pakistan Economic Corridor (CPEC). He said special economic zones are being established through this mega project

Urging the Turkish investors to  start working from now to benefit from the huge opportunities coming out of BRI,  PM said  it would connect those parts of the world which had been no or less connectivity, adding that the issue of huge distance impeding Pak-Turkish trade would also be resolved.

TOBB is the highest legal entity in Turkey representing the private sector with 365 member associations from local chambers of commerce and industry.

The prime minister said the government is focusing on good governance in the country and “we are ensuring the easy trade in Pakistan in foreign investors”.

He said that there is a huge opportunity in the field of tourism, adding that “half of the 20 highest peaks in the world are in Pakistan which reflects its potential for international mountaineers.”

He said Pakistan has 120 million youngsters in its population who can play a vital role in the economy.

The prime minister said 50 million affordable houses will be constructed within the next five years.

Prior to landing in Turkish capital, he visited Turkish city of Konya where he visited the tomb of renowned jurists and Islamic scholar Maulana Jalaluddin Rumi and laid a wreath at the grave.

Earlier, PM Khan was warmly received by Governor Konya Cüneyit Orhan Toprak and Pakistan Ambassador M. Syrus Sajjad Qazi at Airport.

The prime minister is accompanied by a high-level delegation, including Minister for Foreign Affairs, Makhdoom Shah Mehmood Qureshi, Minister for Finance Asad Umar; Minister for Planning, Development and Reform Makhdoom Khusro Bakhtiar, Adviser to the Prime Minister on Commerce, Abdul Razak Dawood, Foreign Secretary Tehmina Janjua and Special Assistant to Prime Minister on Overseas Pakistanis Zulfikar Bukhari.

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PAC demands briefing on CPEC power projects

Source: Express Tribune

Date: 2nd January 2019

Author: Shahbaz Rana

ISLAMABAD: 

The Public Accounts Committee (PAC) on Tuesday decided to get a briefing on energy projects being setup under the China-Pakistan Economic Corridor (CPEC) after some members raised questions about high rate of returns given to Chinese investors and location of certain power plants.

The questions were mainly raised by members belonging to the Pakistan Tahreek-e-Insaf (PTI) and the Pakistan Peoples Party (PPP) during a briefing given by the Power Division. Later, PAC Chairman Shehbaz Sharif decided to get a comprehensive briefing from the Power Division.

Shehbaz also announced to setup two PAC sub-committees to look into the issues of overbilling by the power distribution companies and how to ensure generation of electricity from the cheap sources.

“Pakistan has offered very high rate of return in the range of 25% to 35% in dollar terms and the government of Pakistan guarantees are involved in these deals,” said the PTI’s Senator Shabbli Faraz.

A report by the Ministry of Planning revealed that during the next 20 years CPEC power projects related outflow would amount to $32 billion including debt repayments and repatriation of profits.

But the Power Division Secretary Irfan Ali told PAC that the internal rate of return of CPEC power projects is in the range of 17% to 25% due to different nature of input fuels of these plants.

It is the return on equity that in case of energy projects is as high as 34.2%, starting from 25%.  The PPP’s Naveed Qamar questioned the difference in rates of returns given to various power plants setup under CPEC.

“CPEC projects are in the IPP [independent power producer] mode and the Central Power Purchase Agency pay the investors through tariffs”, said Irfan Ali. “The power projects investors can repatriate their profits to China.”

The PPP’s Raja Pervaiz Ashraf questioned the rationale of setting up coal-based CPEC power plant in Sahiwal. “There is no valid reason for establishing the coal-based power plant far away from the seaport that is now a serious source of pollution and rising temperatures,” said the former PM.

The Pakistan Power Infrastructure Board managing director said the 1,320MW power plant was setup in Sahiwal to meet the energy needs of central Punjab. The PTI’s Brig (retd) Ijaz Ahmad Shah said it was a political decision to setup the power plant in Sahiwal.

The PTI MNA Riaz Fatyana, who belongs to this area, said due to Sahiwal power plant, the temperature in adjoining districts has started rising up. However, the Secretary Power argued that the supercritical technology has been used in Sahiwal power plant that addresses the pollution and environment degradation concerns. But Ashraf did not accept his explanation.

Karot hydropower plants want to go back due to problems they are facing. But the secretary power said he had not heard about this. PAC directed the Power Division to give a briefing on the CPEC related issues in light of concerns raised by the members.

The secretary power said the country’s installed electricity generation capacity has increased to 33,836MW but due to transmission constraints, only 21,000MW can be evacuated.

“Some of the constraints will be addressed in next six months that will help to increase the supply to 24,000MW in June this year,” he added. He said after adjustments made, the total installed capacity under CPEC framework is 12,334MW with total investment of $25 billion. About 13 CPEC energy projects are under construction with an investment of $14 billion.

The PTI MNA Noor Alam Khan complained that during the past five years power projects were setup only in Punjab and Sindh while the other two provinces were completely ignored.

Shibli Faraz said that the RLNG-based power plants were being operated as ‘must run” plants, irrespective their efficiency factors. The secretary power said at the existing prices, the LNG-fired power plants were the third most expensive fuel after wind and solar. The LNG-based power plants are producing electricity at Rs14.28 per unit, wind Rs16.93 per unit and solar Rs19.86 per unit, he added.

The cheapest source of power generation is hydro that is providing electricity at Rs5.17 per unit, followed by Rs6.87 per unit by the captive power plants. He said the country faces load shedding due to transmission line constraints and increasing circular debt that surged to Rs755 billion in November.

The secretary informed the panel about the efforts being made to control electricity theft. PAC member Ijaz Shah said unions in power distribution companies are patronising the theft. He said he would resign as an MNA if the secretary power could transfer a particular powerful lineman.

The secretary said the government would introduce a new renewable energy policy next month aimed at enhancing the share of clean energy from only 5% to 30% of the total energy mix in next ten years.

“The government plans to add 5,000MW to 10,000MW more electricity in the national grid from the clean energy sources. Dependency on the imported fuels could be harmful for the country,” he added.

PAC also expressed concerns over the policy of using $500 million Asian Development Bank loan for installing advanced smart meters in the efficient power distribution companies. It suggested installing these meters in companies like Hyderabad, Sukkur and Peshawar where line losses are the maximum.

PAC Chairman Shahbaz Sharif asked Ministry of Power Division to give an in-camera briefing on the Turkish ship-based energy firm, Karkey Karadeniz Elektrik Uretim (KKEU).  He asked the Auditor General of Pakistan to incorporate his input in the briefing whose date will be announced later.

The issue of Karkey project was raised by Raja Pervaiz Ashraf.  The KKEU, a Turkish power company entered into a Rental Services Contract for supply of 231.8 MW electric power for 60 months with GENCO IV on April 23, 2009, but the project was shelved.

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CPEC feeding 300MW of wind energy to national grid

Source: Pakistan Today

Date:  2nd January 2019

ISLAMABAD: The China-Pakistan Economic Corridor (CPEC) has contributed 300MW of clean wind energy to the national grid through its four early harvest wind power projects.

According to sources from embassy of China in Pakistan, the four wind projects that had been completed under CPEC and are connected with the national grid include Dawood wind power project (50 MW), Sachal Energy wind farm (50MW), three Gorges second wind farm project (100MW), and UEP wind farm project (100MW).

Dawood wind power project is a prioritized or early harvest project under CPEC, which installs 33 wind turbine generators with the capacity of 1.5MW per unit and total capacity is 49.5MW on 1,720 acres of land in the coastal area of Gharo wind corridor in Bhanbore, District Thatta, Sindh.

This is a direct investment (FDI) project and the total investment of Dawood wind power project is $115 million. The rate of equity to loan is 30:70 percent.

Dawood wind power project achieved Commercial Operation Date (COD) on April 4, 2017, and annual electric power supply to the National Grid is more than 130GWh, which is sufficient for daily use of 100,000 Pakistan families and is effectively easing the crisis of electricity shortage in Pakistan.

Sachal wind power project was completed in April 2017 at a cost of $110 million. It is located in Jhimpir, Thatta district, Sindh province, about 100km northeast of Karachi.

The total installed capacity of this project is 49.5MW, and 33 Gold wind brand wind turbine generators (WTGs) with a capacity of 1.5MW are installed.

The investment has been made by Sachal Energy Development (private) Ltd, in which Arif Habib Corporation Limited has a 100 percent stake.

HydroChina International Engineering Co, Ltd. is the engineering procurement construction (EPC) contractor. The Industrial and Commercial Bank of China (ICBC) provided a loan. The debt to equity ratio is 85:15 percent.

Three Gorges second wind power project (2×50MW) is located at Jhimpir, Thatta district, Sindh province, 90KM west from Karachi.

This is a foreign direct investment (FDI) project and is invested, developed and constructed by Three Gorges Second Wind Farm Pakistan Limited (TGS) and Three Gorges Third Wind Farm Pakistan Private Limited (TGT).

The total investment amount is $224 million on the basis of Build-Own-Operate (BOO), with a construction period of 18 months and an operation period of 20 years.

The total installation capacity is100MW, with an annual electricity output of 286.6 GWH. It was listed as an actively promoted project in the China-Pakistan Economic Corridor in August 2014.

Pakistan Jhimpir UEP 100MW wind farm is located in Jhimpir, Thatta district, Sindh, 110km from Karachi.

The total installed capacity is 100MW with the supply of 66 sets of wind turbine generators (WTGs) of 1.5MW per set. It also includes construction of a 132KV substation and a control centre.

This is a foreign direct investment (FDI) project and is developed by UEP Wind Power (Pvt.) Limited, a joint venture of Orient Group Investment Holdings Co, Ltd. (99%) and United Energy Group Co., Ltd. (1%). China Gezhouba Group Company Limited (CGGC) is the engineering, procurement, construction (EPC) contractor.

The commercial contract of this project was signed on September 11, 2015. China Development Bank provided financing of $252 million to the project, with the debt and equity ratio of 75 percent: 25 percent. The project became operational in May 2017.

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Provincial govts struggling to facilitate CPEC economic zones

Source: Pakistan Today

Date:31st December 2018

Author: Ghulam Abbas

ISLAMABAD: Despite the federal government’s emphasis on kickstarting development activities at the identified special economic zones (SEZs) under the China Pakistan Economic Corridor (CPEC), the provincial governments are reportedly struggling to facilitate the SEZs with regard to the provision of utility services.

The seven identified SEZs in the country were presently facing several problems, including lack of gas allocation, infrastructure facilities, power supply, telecommunication and broadband services.

However, officials at the Board of Investment claim that electricity supply to the SEZs has already been arranged through 132 KV VAC Grid Station, adding that the relevant distribution company should provide the connections soon.

According to sources, SEZ Value Addition City Faisalabad was facing problems in getting a gas connection while M-3 Industrial City Faisalabad was unable to ensure the required electricity, as only 40MW were approved for the SEZ against the total requirement of 485MW.

Similarly, a request by the Punjab Industrial Estates Development and Management Company (PIEDMC) for the supply of gas to Quaid-e-Azam Apparel Park (QAAP), Sheikhupura, was still to be considered. The request was lying pending with different government departments/agencies.

Meanwhile, the decision to supply electricity to various units in Korangi Creek Industrial Park was yet to be taken while work on the Pakistan Telecommunication Company Limited (PTCL) network was still under progress.

The gas requirement of 3.5mmcfd for Khairpur Special Economic Zone (KSEZ) was denied by Sui Southern Gas Company (SSGC) after carrying out a survey on a report submitted to Sui Southern Gas Planning Department Hyderabad with regard to the possibility of a gas connection.

Moreover, gas connection to Bin Qasim Industrial Park was facing problems as the gas network was yet to be laid down. Power supply to Hattar Special Economic Zone, Phase VII, was also an issue, as power supply to the SEZ would be provided through various sources including 50MW through solar power; 70MW through hydropower (wheeling); and 345MW through the combined cycle power plant.

In addition to the above, Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC) would source electricity from Pakistan Electric Supply Company (PESCO). The issue of transfer of land to PESCO for the proposed grid station was still unresolved while Sui Northern Gas Pipeline Limited would conduct a survey (to asses if it is feasible or not feasible) for 40MMCFD of gas allocated for Hattar SEZ.

The over 4,500 acres M3 industrial estate was strategically located along M3 motorway keeping in view that Lahore, Karachi motorway of CPEC was just within a half an hour drive. The industrial surplus produced in this estate could be easily exported to Karachi, Gwadar, China and to the landlocked Central Asians States through reliable connectivity.

Though all plots available at SEZs in Faisalabad have been sold out to investors, provision of electricity, gas and other services to the locality was yet to be ensured by the Punjab government, said a source at the zone.

“Although Prime Minister Imran Khan lauded the performance of Punjab Chief Minister Usman Buzdar, we are witnessing a complete lack of governance in the province. The bureaucracy, which used to obey former chief minister Shahbaz Sharif, is apparently not taking the present government seriously. A company, which wants to establish its unit here, needs to wait for over 10 months to get an electricity connection,” said the insider, adding that the power and gas companies were also not cooperating with the new entrants at the zone.

“The plots at M3 Industrial Estate, which has been declared as SEZ, have been sold out to local firms or those in joint ventures with Chinese companies. A Chinese firm, which has joined hand with a local company to buy the land at the SEZ, was also uncertain about the commencement of its unit, as the firm may get the electricity connection in next 10 months,” said the source.

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CPEC – a win-win situation for Pakistan, China

Source: The Daily Times

Date: 31st December 2018

ISLAMABAD: The China-Pakistan Economic Corridor (CPEC) is a major and pilot project of the Belt and Road Initiative and one major platform for comprehensive and substantive cooperation between China and Pakistan.

CPEC is an important consensus reached by the two countries. The Chinese leaders attach great importance to the development of CPEC. In May 2013, Chinese Premier Li Keqiang proposed the initiative of CPEC during his visit to Pakistan. During President Xi Jinping’s visit in April 2015, both sides agreed to promote a “1+4” pattern of economic cooperation, featuring a central role of 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 visit to China, the two sides reaffirmed their complete consensus on the future trajectory of the CPEC, timely completion of its on-going projects and joint efforts for realization of its full potential with a focus on social-economic development, job creation and livelihoods and accelerating cooperation in industrial development, industrial parks and agriculture.

Over the past 5 years, under CPEC, 11 projects have been completed. 11 projects are under construction. The total investment of the above 22 projects is around $18.9 billion. There are 20 more projects in the pipeline.

Being the largest and most comprehensive project under BRI initiative, CPEC is of great political, economic and social significance to China and Pakistan. Politically, it is a demonstration of the political willingness of the two countries to promote Sino-Pakistan strategic partnership of cooperation; economically, it is a project that will bring joint development to the two countries; and socially, it is aimed at mobilizing the people to work together for the betterment of our two nations.

II. Mechanisms of cooperation

To implement CPEC cooperation, China and Pakistan 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 JCC secretariats are established in the National Development and Reform Commission (NDRC) of China and Ministry of Planning, Development and Reforms of Pakistan respectively. The two secretariats are responsible for communicating and coordinating with the line ministries related to the projects of CPEC. Until now, JCC has convened 8 meetings and since 2015 it is held on annual basis. The 8th meeting was held in Beijing on December 20, 2018. During the 8th JCC, both side reviewed the progress of the CPEC and reached new consensus. The two sides also decided to establish Joint Working Groups on social economic development and international cooperation.

The JCC has been effective in planning and construction of CPEC projects through equal, friendly consultations and mutual accommodation. The list of the projects as well as the long-term plan for CPEC were discussed and finalized in the JCC meetings.

III. Four major areas of the CPEC:

A. Energy

Energy is the power engine for economic development and a key factor to ease load-shedding and improve the lives of millions of people.

Energy projects are highlighted as the priority sector under the CPEC framework. There are 15 energy projects planned as priority with a total generation capacity of 11,110MW, among which 7 are completed and in operation and 6 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 Pakistani national grid, amounting to more than 11% of the total installed capacity of 29,000 MW in Pakistan.

CPEC energy projects include hydro, solar, wind and coal-fired power plants. The major coal-powered plants use super-critical thermal technology, which is the most advanced environmental control technique for coal-fired plants currently. Each project has got the approval of environmental impact assessment by the Pakistani government before the construction.

CPEC Energy projects are providing affordable energy to Pakistani consumers in a diversified way. The tariff of power plants have been sharply decreased from 16-18 Rs to around 8 Rs per unit. With the introduction of CPEC energy projects, Pakistan also reduced its heavy dependence on gas and LNG power plants, which account for 50% of total installed capacity. Pakistan’s foreign exchange has been saved in this regard.

CPEC energy projects are foreign direct investment based on commercial contracts, which are in accordance with the standard clauses provided by the Pakistani government. The CPEC energy projects are executed in accordance with BO(O)T mode. The financing of the energy projects are mainly provided by the equity of Chinese companies and commercial loans which borrowed from China Development Bank and other commercial banks in the rates of around 5%. In another word, any debt arising from CPEC energy project would be borne by the Chinese investors instead of the Pakistani government.

B. Infrastructure

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 3 projects under construction. The information highway for Laying of optical fiber cable (OFC) from Rawapindi to Khunjrab is in operation. These ongoing projects are funded by preferential loans from the Chinese government at around 2% interest rate with a total amount of 5.874 billion USD. The up-gradation of ML1 railway and the KCR are under discussion.

KKH Phase-II (Havelian-Thakot) project is located in Khyber Pakhtunkhawa with a total length of 118km, of which 39km is expressway with subgrade width of 24.7m, and 79km is Class-II highway with subgrade width of 12.3m. After the completion of KKH-II, the travel time from Havelian to Thakot will be reduced from 4 to 1.5 hours.

Peshawar-Karachi Motorway, also known as PKM project, starts from Karachi,passing through Lahore, and ends at Peshawar. The PKM (Sukkur-Multan section) is 392km long and 31.25m wide. It is a 6-lane access controlled Intelligent Transportation System (ITS) motorway funded by China’s EXIM Bank. It is the largest project under the CPEC framework.

ML1 is another mega project agreed at the JCC meeting. In May 2015, the National Railway Administration of China and Ministry of Railways of Pakistan signed a Framework Agreement on joint feasibility study of upgrading ML-1 and establishment of Havelian dry port. The feasibility study was funded by the Pakistani government. Until now, preliminary design of phase I has been completed. In May 2017, the framework agreement on up gradation of ML-1 and establishment of Havelian dry port was signed between the NDRC and Ministry of Planning. Both sides are engaged in negotiations of technical and financial terms of the project. The completion of this project will provide convenient and low-cost transportation for cargo and passengers benefiting 70% of the population of Pakistan along the ML-1.

China-Pakistan cross-border optical fiber cable project is an early harvest project under CPEC, with a total amount of USD 44 million. It runs from Rawalpindi to Khunjrab. It includes 820 km cable laying, 9 sites civil work, equipment installation and commissioning in the equipment room, as well as the backup of microwave links. The working environment is harsh, in particular that there is an altitude of 4500m near Chinese-Pakistan boarder.

C. Gwadar Port

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 USD in the port renovation. 5 new quay cranes, a 100,000 M2 storage yard, a seawater desalination plant with capacity of 220,000-gallon pure water/day, 2 sets of sewage disposal systems and cargo handling equipment have been installed and 80,000 M2 green space has been added to the port area. 400,000 tons of cargoes have been handled by Gwadar Port in 2017.

The Gwadar Free Zone is located 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 923-hectare Free Zone includes an initial area (25 hectares) and the northern area (898 hectares). The initial area is located in the west of the existing port. Its main purpose is to play a pilot role in setting up industries, and to increase cargo capacity for the port. The construction of the initial area includes a few projects: infrastructure, business center, trade exhibition hall, cold storage, warehouse. By January of 2018, all those constructions have been completed. The Gwadar Free Zone was inaugurated and the first International Expo was held in January, 2018.

Around 30 companies have invested in the Free Zone, with direct investment of about $474 million. With the construction of the free zone, the city of Gwadar will become a commercial hub of the region in the near future.

The project of Gwadar East Bay Expressway was agreed by China and Pakistan during President Xi Jinping’s visit to Pakistan in 2015. The EPC contract of the project was signed in September and the construction was started in November 2017. The construction period of the project is 36 months with the designed speed of 100 kilometers per hour, which is 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 southern and northern areas of Gwadar.

D. Industry cooperation

The federal government of Pakistan and each province have attached paramount importance to industrial development and the construction of SEZs. The work has been in progress with the joint efforts of both sides.

In November 2015, Pakistan proposed to set up industrial cooperation working group under JCC, claiming that Pakistan has advantages such as adequate labour force and huge market potential to develop manufacturing. China agreed to strengthen cooperation in the following industries: steel, cement, automobile, construction materials, home appliances, textile, light industry and apparel, etc.

In March and April 2016, Pakistan had sent two delegations to China for studying China’s best practice in SEZ development. In November 2016, the two side established the joint working group and held the 1st meeting on industrial cooperation, during which the two sides agreed to work out the mechanism, key areas of cooperation and key projects. Later on, in the 6th JCC Meeting in the same month, Pakistan had submitted a list of 9 SEZs to China.

From 2017 to 2018, China’s expert panel had 3 successive on-site visits to 9 proposed SEZs, trying to make a comprehensive analysis and proposal on the strategy of industrial development for Pakistan. Through interactions with provincial governments, business associations and enterprises, the expert panel understood their demands in local development. The Chinese experts group suggested that the development strategy of each industrial park under CPEC project must be combined with the economic foundation and actual conditions in the locality, with distinctive features and differentiated approaches. The Chinese expert panel had also sent BOI its appraisals of the feasibility studies of 6 SEZs, while the rest 3 are to be submitted.

In early 2018, Pakistani Government had instructed BOI to formulate more accurately-targeted and more favorable policies on top of current preferential policies for two to three SEZs that were to be listed as key projects under CPEC. The two sides are negotiating details on the implementation of the Rashakai SEZ, which will be inaugurated as early as the first quarter of 2019. During the 8th JCC meeting in Beijing, the NDRC and BOI signed the MOU on industry cooperation, which will facilitate the cooperation in this regard.

Formulating and implementing preferential policies are a complex and systematic process which involves multiple ministries and institutions both at national and regional level. Chinese side suggests that Pakistani side should review relevant policies in a systematic manner to put forward trial or temporary institutional documents that will ensure immediate implementation of the policies. During the implementation, timely revision is required in the event of new situations to ensure the coherence, sustainability and feasibility of each preferential policy.

IV. Job creation and social responsibility

Localization is the principle that China adheres to in CPEC. According to the preliminary statistics, CPEC projects have created more than 75,000 direct job opportunities for Pakistani people. In order to promote economic development and employment of Pakistan, Chinese companies also subcontract a large number of 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.

According to a report by Deloitte in 2017, CPEC will create 700,000 jobs for Pakistan from 2015 to 2030. A recent study by CPEC Centre of Excellence, Ministry of Planning, Development and Reform of Pakistan showed that CPEC could help create 1.2 million jobs under its presently agreed project.

Chinese companies have engaged themselves in three areas to fulfill their social responsibilities in collaboration with the Chinese Government. First is vocational training and education. During the 8th JCC, both side held the first social economic joint working group meeting. The Chinese side has proposed to conduct social cooperation on agriculture, education, medical care, poverty alleviation, water supply, vocational training.

The Chinese companies shared advanced techniques and successful experience to help Pakistan transform its human resources into advantages. The Chinese companies have sponsored thousands Pakistani students to study in China with scholarships and sent hundreds of Pakistani engineers and professionals to China for training. Chinese universities have set up two vocational training centers with local universities in Lahore and Quetta.

China Fund for Peace and Development (CFPD) has built the Faqeer primary school in Gwadar, which is known as “Chinese Pakistan Friendship school”. The School was completed and put into use in September 2016, accommodating 500 students, more than double of its designed capacity. Since the operation of the school, the Chinese company has donated books, bags, stationery, uniforms and 3 school buses for the students. The Chinese Embassy has also made donations to the school.

Second is medical care. A 500m²CPEC emergency medical center was set up in Gwadar port in May, 2017. It was donated and run by the Chinese Red Cross Foundation with a top class Chinese medical team working there, providing local residents with necessary first aid treatment and free medical examinations for local primary school students. Many Chinese companies have also donated medicine to residents near the project, and provided free medical examinations to the local people.

Third is mini projects for uplifting the living standards of poor people across different parts of Pakistan. Chinese companies are actively exerting their own advantages to build bridges and drill wells for residents to help them solve water and travel problems.

V. CPEC Long-Term Plan

In line with the consensus reached between leaders, relevant ministries and departments of both countries have set up a cooperation mechanism to coordinate the development of CPEC and jointly formulated the Long-Term Plan for China-Pakistan Economic Corridor (2017-2030).

China and Pakistan signed the Long-Term Plan at the 7th JCC after obtaining consent of both federal government and all the Pakistani provincial government. The plan provided the macro guidance for implementation of CPEC in the next phase, and could be adjusted based on the real situation as well as the consensus between the two parties during its implementation in the future. The Long-term Plan has made planning and design for CPEC’s next step in the areas of connectivity, energy, trade and industrial parks, agricultural, poverty alleviation, tourism, people’s livelihood and finance. This plan is effective till 2030, the short-term projects included will be considered up to 2020; medium-term projects up to 2025; and long-term projects up to 2030. It was made public by the two governments after it was signed.

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CPEC can create 1.2 million jobs: Chinese embassy

Source: The Nation

Date: 31st Dec,2018

The Chinese Embassy in Pakistan said that the China-Pakistan Economic Corridor (CPEC) has the capacity to create 1.2 million jobs.

According to details, the Chinese Embassy issued details related to the status of CPEC and shared that, over the course of five years, 11 projects have been completed while 20 projects are in pipeline.

The total investment on CPEC projects worth $18.9 billion. The embassy told that the ongoing 20 projects are related to energy, infrastructure, Gwadar port and industrial sectors. Further, seven energy projects have been completed which are generating 6900 megawatt electricity, the spokesperson of the Embassy added.

About 75,000 Pakistanis benefited from employment opportunities from this venture, as per the Chinese official.

Moreover, the spokesperson apprised that the projects of CPEC are short-term, mid-term and long-term which will be completed by 2020, 2025 and 2030 respectively.

Regarding infrastructure projects, the report said currently three projects are under construction. It said CPEC is the largest and most comprehensive project under Belt and Road Initiative, besides being of great political, economic and social significance both to China and Pakistan.

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BRI, aimed at economic uplift of partners, is not a geopolitical tool

Source: Global Times

Date: 27th December 2018

Is the Belt and Road initiative (BRI) a geopolitical strategy and tool China has created to scramble for hegemony as what the US and some Western countries claim? This is the most contentious argument as the international community sifts through China’s intention of reaching out to the wider world in a momentous spree of infrastructure building and poverty alleviation.

The fact is that the BRI is a geo-economic rather than geopolitical construct and has nothing to do with geopolitics in form or content. China neither has the intention of forming alliances through the BRI nor plans to seek a sphere of influence. China seeks partners, not allies, in implementing the initiative. The US is grossly mistaken in regarding the initiative as a geopolitical concept.

Some in the West call the BRI China’s Marshal Plan. They are two different things that are not comparable. The Marshall Plan was an American initiative providing aid to West European countries with the political motivation of containing the spread of Communism at the start of the Cold War. The recipients were countries with the same political system as the US and the other goal of the plan was to facilitate the formation of a military alliance with European countries.

In sharp contrast, the BRI is more about investment. Countries of different political systems are welcomed to participate and it doesn’t aim at a military alliance. The significance of the BRI as a geo-economic concept lies in that it can help solve development problems some backward regions are grappling with and provide them enabling conditions for the same.

I recently visited some countries and regions along the Belt and Road routes. Take Peshawar in Pakistan, a city plagued by terrorism in northern Pakistan. The security there has certainly improved in recent years with the progress in the China-Pakistan Economic Corridor. Local people know that terrorism would stand in the way of Belt and Road projects, so they consciously resist the designs of fissiparous elements, leading to reduction in incidents of terrorism.

In northern Myanmar, the construction of the China-Myanmar Economic Corridor under the BRI has seen a marked improvement in security as the importance of peace and stability in facilitating the project dawns on the people.

The BRI can influence major-power relations. The US is planning a $60 billion fund that will bankroll infrastructure projects in Africa, Asia and the Americas and the European Union has also put forward its foreign policy plan to improve transport, energy and digital infrastructure links with Asia. These moves will help meet the huge demands for infrastructure in developing regions. Why can’t major powers cooperate to carry out these infrastructure development initiatives?

Japan and China have agreed to step up cooperation in infrastructure projects in third countries. Some Western countries such as Britain are eyeing closer cooperation with China under the BRI. The initiative is open and inclusive; the more participants it draws in, the more secure and healthier its development. It will serve as a platform to step up cooperation among major powers.

In short, the BRI is a promising mechanism for economic cooperation, a new tool for managing security and a platform that can be used to explore more major-power cooperation.

The article was compiled by Global Times reporter Yu Jincui based on a speech by Huang Renwei, executive vice dean of Fudan Institute of Belt and Road & Global Governance, at the Third Understanding China Conference recently held in Beijing.

11 CPEC projects completed, 11 in progress

Source: The Nation

Date: 31st Dec, 2018

ISLAMABAD  –   Since the inception of China Pakistan Economic Corridor five years ago, 11 development projects have so far been completed with as many under construction using a total investment of around $18.9 billion, which have also created 75,000 jobs for Pakistani people.

According to the latest progress report on CPEC issued by the Chinese Embassy in Pakistan, 20 more projects were in pipeline under CPEC, which was the largest and most comprehensive project under the Belt and Road Initiative  (BRI), besides being of great political, economic and social significance to China and Pakistan.

For implementation of CPEC, the two sides have set up a ministerial-level Joint Cooperation Committee on CPEC Long Term Planning (JCC) and seven joint working groups on planning, energy, transportation infrastructure, Gwadar Port, industrial cooperation, social economic development and international cooperation. They also decided to establish Joint Working Groups on social economic development and international cooperation.

Out of 15 energy projects planned as priority with a total generation capacity of 11,110MW, seven have been completed and in operation, while another six are under construction with a total capacity of 6,910 MW.

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 the country

CPEC energy projects are providing affordable energy to Pakistani consumers in a diversified way. The tariff of power plants has been sharply decreased from Rs 16-18 to around Rs 8 per unit. With the introduction of CPEC energy projects, Pakistan also reduced its heavy dependence on gas and LNG power plants, which account for 50% of total installed capacity.  The CPEC energy projects are foreign direct investment and are executed in accordance with BO(O)T mode. Any debt arising from the CPEC energy projects would be borne by the Chinese investors instead of the Pakistani government.

Regarding infrastructure projects, the report said currently, three projects including KKH Phase-II (Havelian-Thakot section), Karachi-Lahore Motorway (Sukkur-Multan section) and Lahore Orange Line are under construction. The information highway for laying of an optical fiber cable (OFC) from Rawapindi to Khunjrab is in operation. These ongoing projects are funded by preferential loans from the Chinese government at around 2% interest rate with a total amount of 5.874 billion USD. The up-gradation of ML1 railway and the KCR are under discussion.

About Gwadar Port, it said up to now China Overseas Ports Holding Company (COPHC) has invested $ 250 million in the port renovation. Five new quay cranes, a 100,000 M2 storage yard, a seawater desalination plant with capacity of 220,000-gallon pure water/day, two sets of sewage disposal systems and cargo handling equipment have been installed and 80,000 M2 green space has been added to the port area. 400,000 tons of cargoes have been handled by Gwadar Port in 2017.

The Gwadar Free Zone is located in the northern part of Gwadar. The planned development period is from 2015 to 2030, and is divided into four phases. The 923-hectare Free Zone includes an initial area (25 hectares) and the northern area (898 hectares).

Around 30 companies have invested in the Free Zone, with direct investment of about $474 million. With the construction of the free zone, the city of Gwadar will become a commercial hub of the region in the near future. The construction of Gwadar East Bay Expressway project was started in November 2017 and would be completed in 36 months with the designed speed of 100 kilometers per hour.

About the industrial cooperation, the embassy said Pakistan had submitted a list of nine Special Economic Zones to China and from 2017 to 2018, China’s expert panel had three successive on-site visits to proposed SEZs. The expert panel had also sent BOI its appraisals of the feasibility studies of six SEZs, while the rest three are to be submitted.

In early 2018, Pakistani Government had instructed BOI to formulate more accurately-targeted and more favorable policies on top of current preferential policies for two to three SEZs that were to be listed as key projects under CPEC.

According to the preliminary statistics, CPEC projects have created more than 75,000 direct job opportunities for Pakistani people. The Chinese companies also subcontract a large number of projects to local Pakistani companies.

According to a report in 2017 by Deloitte, a professional services firm, CPEC will create 700,000 jobs for Pakistan from 2015 to 2030. A recent study by CPEC Centre of Excellence, Ministry of Planning, Development and Reform of Pakistan showed that CPEC could help create 1.2 million jobs under its presently agreed project.

Under social responsibilities, Chinese companies were also investing on vocational training and education, human resource development through scholarships to thousands of Pakistani students, medical care and mini projects for uplifting the living standards of poor people across Pakistan.

The two sides have set up a cooperation mechanism to coordinate the development of CPEC and jointly formulated the Long-Term Plan for China-Pakistan Economic Corridor (2017-2030). This plan is effective till 2030, the short-term projects included will be considered up to 2020; medium-term projects up to 2025; and long-term projects up to 2030.