CPEC’s growth-led objectives

And the challenges faced

China-Pakistan Economic Corridor (CPEC) Project 2016 is deemed to be an attractive opportunity for Pakistan to transform its socio-economic outlook. It is an economic revolution, which is expected to accelerate the growth of trade and the industrial and agricultural sectors.

CPEC is the name of a portfolio of projects worth $46 billion. It includes a four part development of Gwadar Port, investment in infrastructure connecting roads, railways and airports, and an energy portfolio comprising $ 34 billion investment; whereby Chinese companies will begin more than 16,000 MW projects in Pakistan.

About 10,400 MWS capacity will be added to the national grid by implementation of early harvest energy generation projects due to be completed by 2017/18. The energy projects including coal, hydel, wind and solar plants are spread across all provinces of Pakistan. The prominent energy projects include pipelines to transport oil and gas to Kashgar; the completion of the Iran-Pakistan gas pipeline; and numerous coal, wind, solar, and hydro energy plants that would add some 10,000 megawatts to energy-starved Pakistan by 2018.

The project has allocated about $ 12 billion for infrastructure development. The notable projects include a railway link connecting Gwadar, widening the Karakoram Highway, building a deep sea commercial port on Pakistan’s southern coast, and a 125-mile long tunnel connecting Pakistan and China.

CPEC Project is not only going to open new corridors of trade for China and Pakistan but it is expected to benefit the whole South Asian region.  Trade and economy is likely to seek an impetus among Pakistan, China, Iran, Afghanistan and Central Asian Republics as a result of CPEC initiatives. Improved trade and connectivity amongst these countries is likely to ensure regional stability, peace and prosperity.

Prime Minister Nawaz Sharif, in his inaugural address at CPEC Project asserted that it is a golden initiative of the contemporary era. It rightly complements Pakistan’s vision of 2025, which emphasises on sustainable growth. In addition, the premier said that the relationship of trust and honesty between the two nations will expand and grow.

He said that the project would not only aid in development of Pakistan’s infrastructure, but it would also provide technical know-how, expertise and innovation for industrial development. It would help to develop all areas of Pakistan equally especially the remote and underprivileged areas of   Gilgit-Baltistan and Khyber Pakhtunkhwa would benefit greatly.

The project is indeed attractive with regard to the development of Gwadar port with an objective to develop it as a “model smart port city”. Various financial incentives have been planned under the project to establish economic zones in Gwadar Port to facilitate the development of required infrastructure. A grant of $10 million dollars has been provided by Chinese government to establish Pakistan-China Vocational and Technical Training Institute in Gwadar Port to provide employment opportunities and required training to the local people there. The construction of an international airport and East Bay Expressway in Gawadar are in the finalised stage of approval by China in the project.

The provincial governments strongly support the significance of CPEC Project, and attach high hopes with the government for its successful implementation. Recently, the Chief Minister of Gilgit-Baltistan, Hafiz ur Rehman acknowledged the significance of CPEC Project in the development of Gilgit-Baltistan.

In addition, the government of Khyber Pakhtunkhwa is equally proactive to ensure successful implementation of CPEC Project. Recently, Khyber Pakhthunwa’s Assembly Speaker, Asad Qaiser requested the federal government to consider equal representation of people of Khyber Pakhthunwa in the CPEC project, and to safeguard their rights. He hoped that the government would fulfill its promises of establishing industrial zones in Khyber Pakhthunwa, and construction of road connecting FATA.

The above-mentioned growth-led objectives of CPEC and claims of government are attractive for the future development and uplift of Pakistan. However, the question which arises is will it be possible for the government to achieve these objectives or not in the face of multitude of challenges, hurdles and threats from the opposition parties, and whether or not Prime Minister’s and Minister’s statements supporting the project stand a paradoxical claim.

Pakistan at present is facing many challenges, which may impede the timely realisation of CPEC objectives. A huge deficit in energy and infrastructure sectors exist, which impedes the production and trade of goods and services. The current energy crisis is likely to be a hurdle in realisation of CPEC Project’s goals as Pakistan’s electricity generation capacity at present stands at 22,797 MW. An average demand of 17,000 MW exists, and power shortfall is beyond 6,000 MW, which is expected to accelerate in the years ahead as population is expanding by 2% annually. Another issue of grave concern is that the government aims to end the energy crisis by 2018 but amidst numerous challenges and controversies; speeding the pace of power generation projects of CPEC to attain the government’s energy goal is questionable.

Huge amount of capital is required to grow investments in infrastructure and energy. However, a developing country like Pakistan faces scarcity of capital, which puts it in doldrums. The projects like CPEC, which are long-gestation reap profits over the medium to long-run and add to the problem of capital constraints.

In addition, the infrastructure and energy sectors, which are the backbone of CPEC Project are government-led initiatives. They often are characterised with numerous procrastinations. In order to pace the industrialisation process required for the success of CPEC Project, gigantic cooperation from private businesses and international financial sponsors is required to encourage smooth functioning and management. However, frequent terrorism and security threats and concerns in the country is a roadblock. The recent attacks of terrorism especially in Balochistan seem to be international maneuvers to impede the progress of the CPEC Project, and require immediate attention.

The ineffective strategic framework of the Federal Government is making the project a bone of contention amongst the provinces, and is failing to remove their concerns, allegations and doubts regarding the project’s pace. This is likely to mar the execution of CPEC Projects by delays. The opposition parties have vehemently asserted that the projects are too much focused on Punjab province; the heartland of Pakistan Muslim League Nawaz (PML-N). They have claimed that the Federal Government has begun the work on eastern routes, and has allocated adequate funds for it. However, the western routes have been ignored by the government, which has raised criticism and agitation especially in Khyber Pakhtunkhuwa; thereby making the project controversial.

The originally approved and uncontroversial western route demarcated in the CPEC Project earlier covers the areas from Hukla, Musa Khel, Mianwali, Dera Ghazi Khan, Panjgore to Gawadar. However, the CPEC Project for 2016-17 has allocated Rs 22 billion only for Hakla to Dera Ismail Khan motorway in contrast with a massive sum of Rs 75 billion allocated for the eastern route, which is accelerating the agitation and grievances amidst KPK and Balochistan governments. These governments are continuously demanding to initiate work on the approved western route covering Burhan, Peshawar, Kohat, Bannu, Dera Ismail Khan, Zhob and Quetta on the same pace the work on eastern route is being executed. Such discrimination between western and eastern route of CPEC Project is likely to create conflicts and misunderstandings, which will make the project controversial and lose its economic profitability.

CPEC Project is highly significant for Chinese government as it grants it a 40 years operation rights to Gawadar port, which ensures it a consistent, reliable, and long-term stronghold in Indian ocean and Persian Gulf thereby making it a two-ocean power. New transportation routes will save China billions in transportation costs and time, and will open avenues for Maritime Silk Road linking China to Europe and beyond. Considering this, the point of concern is that is it mainly China, which will reap most of the economic benefits from CPEC deal, or will it largely benefit Pakistan.

On the whole, CPEC Project is indeed lucrative for national development. It will not only promote transnational interconnection but will open new avenues of trade and investment. It is the forerunner of transformational change for the nation. The benefits to be accrued from CPEC Project are enormous. However, these could only be achieved by the planned timeline of 2030 provided all the project’s initiatives are effectively implemented, and a sound mechanism is chalked to overcome the above-mentioned perils, controversies and conflicts facing the CPEC Project.

AIYZA JAVAID

LAHORE