CPEC: External Violence and Internal Opposition

With no water and no electricity, how can the Pakistani government hope to sell Gwadar as the most critical link in the CPEC chain, asks one analyst.

Posted on 05/15/19
By Imtiaz Gul | Via Daily Times
A view of Gwadar port which still faces daunting challenges.

Chinese leadership is keen to develop Gwadar as fast as circumstances will allow. For them, the ultimate objective is to reinforce partnership with Pakistan through China-Pakistan Economic Corridor (CPEC), of which Gwadar is the inalienable symbol. We are here for the long-term friendship and not for commercial profits. This is the resounding and reassuring message out of Beijing.

The fact that Pakistan received a $2 billion soft loan even during the eight-week caretaker government testifies to the “unwavering” Chinese commitment to this “special friend,” goes the argument in Beijing.

But, and this is a ‘big’ but; for realizing the objectives in a fast changing geo-strategic environment, we expect Pakistan to act fast and coherently. If anti-CPEC bureaucrats and politicians continue to treat CPEC with their obsolete Planning Commission regime, and thereby stall implementation, how can we move forward? This concern, despite the high-profile April visit by Prime Minister Imran Khan, is ringing through circles that are the eyes and ears for President Xi Jinping and his close cohorts.

A case in point is the proposed 300MW power plant for the entire Gwadar town and its free industrial zone. Following foot-dragging either by the provincial government or the powers that be on providing free land for the project, Power China, the company supposed to construct the plant, has finally leased the land apparently at twice the market price.

But NEPRA in Islamabad remains another big hurdle. It has thus far refused to revise the rates it has offered to the power company, which the latter says is ridiculous in view of the small capacity (300MW) and the difficult operational environment.

Strangely, the existing average rate for private power plants hovers around 10 cents per unit. The 1,320MW plant at Port Qasim also sells power to the national grid at nearly 8.5 cents per unit. But NEPRA refuses to go beyond the seven cents it has offered to Power China.

Our president is determined to push for CPEC implementation as much as he can, said a business executive. All of us have been told to forget about profits and focus only the completion of what “we have promised.”

But frustration of the private Chinese companies over tardy bureaucratic responses to situations that require prompt decision-making seems to be fueling frustration. And this may at some stage dent Xi’s determination, is the fear resonating in Beijing’s business and academic circles.

These executives of some of China’s huge corporations have a definite moot point; with no water and no electricity, how can the Pakistani government hope to sell Gwadar as the most critical link in the CPEC chain?

With no signs of electricity in sight for at least another two years, there is also little hope for the construction of the new airport and the setting up of industries at Gwadar.

The launch of the full scale construction of the new airport is also conditional upon the power plant. If NEPRA and Power China could settle down on the power tariff today, it would still take at least two years to construct and commission the plant only partially, experts say.

Even the Special Economic Zones (SEZs) are generating considerable debate among Chinese business managers. In China, the government takes care of land, water, energy and even hiring of staff for the services’ sector at every new SEZ to set the stage for investments.

But in Pakistan, private foreign businesses burn heels to get permissions, often after doling out “incentives” to officials and politicians involved.

We see the SEZs torn among the federal and provincial governments as well as NEPRA, OGRA, Ministry of Commerce and Ministry of Finance.

Some Chinese academics also quoted the current Sindh chief minister on the issue of land for the new railway track. How can the central government bring investment and the local chief minister turn it into a provincial subject? a business tycoon asked. He should have leapt at the opportunity instead of digging his heels on the land issue, he quipped.

“How can you attract business when they have to deal with so many authorities? In China or even Bangladesh, all you need is to bring in capital and the rest is taken care of by one central authority as a one-window to provide all requisite documentation,” he said. Look at the astronomical cost of the delay in the construction of the Gwadar airport and the proposed power plant. Urgent issues such as Gwadar airport, the power plant and the scarcity of water require deft and non-bureaucratic handling failing which the dream of industrial and social sector development could easily go sour.

Both the prime minister and the GHQ must work jointly to prevent what detractors of CPEC are desperately trying.

This article first appeared in Daily Times. Click here to go to the original.

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