The development of China-Pakistan Economic Corridor (CPEC) has brought an influx of Chinese investment directed towards infrastructure projects in Pakistan. The trade route will stretch from Gilgit-Baltistan all the way to Gwadar in Baluchistan. And despite the fuss it is causing between provincial and federal governments, CPEC is expected to bring massive economic development into Pakistan and increase it’s the geopolitical status in the region.
K-P government’s initiative
The Khyber-Pakhtunkhwa (K-P) Power and Energy Department has completed feasibility studies for five mega power projects which are forecasted to provide the province with 1,123 megawatts (MW) of power.
The projects will be constructed in Chitral and are expected to cost $6.92 billion.
A delegation from the provincial government, while attending a roadshow held in Beijing from April 17-19, had presented plans for building seven hydropower projects with a total capacity of 1,978MW as part of the China-Pakistan Economic Corridor (CPEC). Following the proposal, several Memorandums of Understanding (MOUs) were signed with various Chinese governments.
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Reportedly, feasibility studies for five of the seven projects have been completed and are ready for execution and the cost-benefit analysis for the remaining two projects is underway and will be completed soon.
The projects will be constructed in Chitral and are expected to cost $6.92 billion.
900 Chinese companies had participated in the road show and 82 MoUs had been signed for 86 prepared projects in different sectors
It is yet to be decided how the costs will be divided between the Chinese companies and the K-P government even though the MoUs have been signed.
An official from the Khyber-Pakhtunkhwa (K-P) Power and Energy Department claimed that approximately 900 Chinese companies had participated in the road show and 82 MoUs had been signed for 86 prepared projects in different sectors. He added that one Chinese company had agreed to install solar panels to power 10,000 schools and 400 hospitals in K-P. Another positive aspect of the ongoing process of investment is that it will be in the form of grants and not loans.
To better understand the technical aspects, a delegation of Chinese investors is expected to visit K-P in July this year.
K-P government has also approved assembly of 4,200 CPEC security force which will be tasked to protect Chinese workers. The force will draw personnel from police and various other security forces on a contract basis.
KP’s previous CPEC troubles
The government had initially allocated 90% of funding for the early completion of the eastern route but the opposition parties did not agree with their proposal
The Khyber-Pakhtunkhwa provincial government had previously expressed its distrust in the federal government regarding the implementation of its promises regarding CPEC’s development in the province. It had been agreed that the western route of CPEC, which passes through the province, would be made an integral part of the project and would be prioritized by the government for development.
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The government had initially allocated 90% of funding for the early completion of the eastern route but the opposition parties did not agree with their proposal. An All Parties Conference (APC) was convened which was chaired by Prime Minister Nawaz Sharif in an effort to reach consensus over the plans for the development of CPEC. The APC decided that the western route will be incorporated into the master plan as a priority so that impoverished regions in K-P would benefit.
In November 2016, after a meeting between Executive Committee of National Economic Council (ECNEC) and K-P Chief Minister Pervaiz Khattak, the issues regarding the development of the project were resolved.
However, questions were raised about the implementation of the APC’s decision because of the delays in construction. There was also a dispute between the provincial and federal government over the alignment of the western route.
In November 2016, after a meeting between Executive Committee of National Economic Council (ECNEC) and K-P Chief Minister Pervaiz Khattak, the issues regarding the development of the project were resolved. This facilitated the final approval of the 285km long project.
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Significance of CPEC
CPEC will give China an alternative to the Straits of Malacca route that it currently depends on for trade. Straits of Malacca are subject to continuous squabbles between China and local states like Malaysia and Singapore. The US Navy also keeps its looming presence in the region, threatening China’s independent trade.
CPEC would reduce the 12,000km route through Straits of Malacca to a 3000km route on land through Pakistani territory. It would make Gwadar into a key trade and transport hub.