Posts Tagged ‘China-Pakistan Economic Corridor’

Pakistan: CPEC is in spotlight again as Balochistan raises questions over western route progress

December 15, 2018
The Gwadar-Hoshab-Surab road road is neither part of the western route nor is it a CPEC project at all. — File photo
The Gwadar-Hoshab-Surab road road is neither part of the western route nor is it a CPEC project at all. — File photo

Interestingly enough, the federal government describes the Gwadar-Hoshab-Surab road as a section of the western route in its official briefs and maps when in fact it is the southern common alignment. The government does so because this is the only road that has been built in Balochistan over the last five years.

Also read: CPEC and Balochistan

The reality is that this road is neither part of the western route nor is it a CPEC project at all. This scheme was conceived during the period of General Pervez Musharraf. Construction work on it began in 2007, long before CPEC came into being. The federal government insists on showing it as part of the CPEC’s western route just to deflect political pressure and criticism and to disingenuously show that progress has been made on the route in Balochistan.

Between Basima and Burhan, the western alignment passes through Surab, Quetta, Zhob and D.I. Khan whereas the eastern alignment passes through Khuzdar, Sukkur, Multan and Lahore. Excluding the common alignments, the western alignment is approximately 500km shorter than the eastern alignment.

Timeline for western passage

The western passage was supposed to be built on a priority basis. The grounds for this claim are as follows: First, the all-party conference held at the Prime Minister House on May 28, 2015 concluded that the western alignment of CPEC would be built first.

Second, the CPEC monographic study on transport planning (2014-2030), which was jointly conducted by the governments of China and Pakistan and approved by the fifth JCC in Nov 2015, provides the plan for short-term, medium-term and long-term transport and infrastructure projects under the umbrella of CPEC. This plan provided for the construction of an expressway from Burhan to D.I. Khan and the up-gradation of the existing road from D.I. Khan to Surab (via Zhob and Quetta) into a four-lane highway by 2020.

Work carried out in Balochistan

Over five years have passed since the memorandum of understanding on CPEC was signed in 2013 and progress on the western alignment remains virtually nonexistent. In fact, zero progress has been made on the 750km stretch of Balochistan component of the western alignment. Even worse, nearly three-fourths of the Balochistan component (Zhob-Quetta-Surab section) is not even included in the CPEC infrastructure portfolio. The only section that is officially on the CPEC infrastructure agenda is the D.I. Khan-Zhob section (205km) but here too no progress has actually been made. In contrast, construction work on the eastern alignment is likely to be completed by the end of 2019.

Also read: Balochistan being neglected in CPEC, says Bizenjo

The D.I. Khan-Zhob road was approved as a short-term CPEC project in the fifth JCC held in 2015. Its feasibility study and PC-1 were completed in 2016 and approved by the Executive Committee of the National Economic Council (Ecnec) in May 2017.

Subsequently, a framework agreement was prepared and loan request was submitted to the Chinese side through the Economic Affairs Division. However, in Dec 2017 the Chinese government stopped the promised loan, arguing that previous procedure of release of funds was meant for early-harvest projects only and that new guidelines would be issued for financing non-early-harvest projects.

More than a year has passed since the loan was stopped, and the project remains without finances. In the last meeting of the joint working group on infrastructure held in October 2018, the project was once again postponed till next year.

The Zhob-Quetta and Quetta-Surab sections are not yet officially included in the CPEC agenda. Of these two sections, the Quetta-Surab section was supposed to be built through fina­nces from the Asian Development Bank under the CAREC programme. NHA was supposed to complete the feasibility study by March 2016 and submit the PC-1 to Ecnec for approval.

Three years on, NHA still hasn’t finalised the feasibility study and PC-1 for this road. About the Zhob-Quetta section, the federal government had pledged that it would be financed through the federal PSDP. Token amounts were allocated for this road in the federal PSDPs for 2017-18 and 2018-19, but no concrete step was taken.

In the revised PSDP for 2018-19, both the Zhob-Quetta and Quetta-Surab road projects have been deleted. Balochistan is also home to a section of the eastern alignment, i.e., the Basima-Khuzdar road. This road was approved as a short-term CPEC project in 2015. Like the D.I. Khan-Zhob road, the loan for this project was stopped by China in Dec 2017. The federal government pledged to finance this through the federal PSDP but hasn’t yet delivered on its promise. As a matter of fact, the amount allocated for this road in the revised PSDP for 2018-19 was reduced to mere Rs0.5 million.

Status of land acquisition

Lastly, the directives for acquiring land for the above-mentioned roads were issued in 2015 by the office of the prime minister. In line with the premier’s directives, the Balochistan government conducted surveys, issued notifications under Section 4 of the Land Acquisition Act 1894, shared cost estimates with NHA in Dec­ 2016 and demanded the release of funds to the DCs concerned. Two years on, NHA still hasn’t released a penny for land acquisition, despite allocations being made for this purpose in the federal PSDPs for 2016-17, 2017-18 and 2018-19.

Given where things stand currently, the western alignment of CPEC is highly unlikely to be upgraded in the next five years, let alone be completed by 2020.

The writer is an independent public policy analyst and consultant, who has served as an adviser to the Balochistan government on CPEC

Published in Dawn, December 15th, 2018

https://www.dawn.com/news/1451519/no-progress-made-on-balochistan-component-of-cpecs-western-route

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‘Hope is very much in the air’: Asad Umar on Pakistan’s economy

December 13, 2018
Finance Minister Asad Umar said both the monetary and fiscal policies were moving in the direction of reforms that are required by the IMF. —BBC News screengrab
Finance Minister Asad Umar said both the monetary and fiscal policies were moving in the direction of reforms that are required by the IMF. —BBC News screengrab

When asked how well the government was doing to keep up with the promises made by Imran Khan before coming into power, especially given the fact that the prime minister had previously remarked that he would be “ashamed to go abroad and ask for money”, Umar responded by saying:

“When the government came into power, it was a well-known fact that Pakistan needed some kind of a bailout…the real challenge, the real decision is — and that’s how we will be judged in the future — did we take the decisions of setting the country’s economy on a path where this is going to be what I have repeatedly said, the last IMF programme if we get into one right now.”

Umar said after he took charge as the finance minister, the government reached out to friendly countries for bilateral financial assistance as well as started a dialogue with the IMF simultaneously because it had no time to first work out a strategy and then start negotiations.

The finance minister said, the government did not wait for the IMF to impose any conditions on Pakistan to do what it was required to do.

“In the very first 100 days we increased electricity prices, gas prices, we put in place a supplementary finance budget, we increased taxes, the policy rate has been increased by the central bank, the currency rate has been adjusted by the central bank,” he explained.

He said both the monetary and fiscal policies were moving in the direction of reforms that are required by the IMF.

“We don’t need IMF’s dictation for us to do that because we believe this is what’s necessary. However, the path for reforms is different in the eyes of IMF, as we stand today, versus what we think is right.”

The finance minister said that this was what the ongoing dialogue with IMF was debating over. “There is no difference of opinion with the IMF in terms of what needs to be done. It is the pace, the sequence, and the extent which is being discussed,” he added.

To a question regarding Pakistan standing with Saudi Arabia and in return acquiring monetary assistance, while the world was shocked and disgusted over the news of journalist Jamal Khashoggi’s murder, the finance minister said:

“I would be happy to be ashamed of standing up with a country with whom we have had close bilateral ties…maybe the western leaders should be ashamed of themselves talking about democracy, talking about freedoms, and still reaching out in the same Saudi pockets to take billions of dollars of business deals. The leader of the Western world Donald Trump stands up and openly says ‘I am getting too much business from Saudi Arabia for me to worry about what happened to Khashoggi.'”

He clarified Pakistan was just being consistent in the bilateral relationship with Saudi Arabia which has remained the same regardless of who remains in power. Pakistan’s relationship with Saudi Arabia goes back half-a-century and it had got nothing to do with Yemen or Khashoggi, he added.

With respect to the investment in Balochistan under China Pakistan Economic Corridor (CPEC), the minister said the Balochistan government was eager to enhance investment in the province under the CPEC project.

He said Pakistan’s debts payable to China were less than 10 per cent of its total debts while the US was the largest debtor of China with over $1.3 trillion debt owed to it.

To another question, Umar said people of Balochistan were patriotic Pakistanis but there were some sponsored activities by terrorists who were trained and funded from outside Pakistan.

“There are concerted efforts led by India to damage the CPEC. People of Balochistan have elected a government that fully stands by CPEC and have also shown loyalty with Pakistan,” the finance minister said.

To a question regarding tax reforms, he said the government has taken several new initiatives aimed at enhancing the tax base and revenue to facilitate the socio-economic development of the country.

The revenue generation aspect is absolutely central to be able to deal with the horrendous challenges that we have, the finance minister said.

“The health and education situation needs drastic reforms and for that you need revenue, and for that, you need an efficient revenue authority,” Umar said, adding: “We have separated tax policy from tax administration.”

The finance minister said that almost the entire top leadership of the revenue authority has been changed.

He also said that modern technology is being utilised to chase those who were evading taxes and 3,100 of them have already been served notices, whereas a list of over 7,000 top tax evaders has been prepared.

https://www.dawn.com/news/1451028

Why is Pakistan Chasing Away Foreign Investors?

December 3, 2018

With a population of more than 200 million people, Pakistan may be a growing market for foreign electronic goods and mobile phones. But a host of issues relating to the business environment, taxation and low purchasing power of consumers continue to keep them from investing in the manufacturing industry here.

“Pakistan is a strategic market for us… but it still remains a very small market for electronic goods because of the low purchasing power of consumers,” TCL Pakistan General Manager Sunny Yang said in response to a question whether her company planned to invest in TV parts manufacturing in Pakistan. She went on to list problems that foreign companies have to take into account when the time for making such a decision comes up.

Image result for , pakistan, pictures

“A small market size or the low purchasing power of consumers isn’t the only issue… a company has to consider the country situation as well,” added the executive of the world’s third largest LED TV manufacturer from China, which entered the Pakistan market back in 2013. Before that, it marketed LED TVs in Pakistan as a vendor of the Nobel brand 2006 onwards.

‘Customs duty on TV assemblers rose from 5pc to 30pc in five years’

“The ever-changing customs tariffs, exchange rate volatility leading to economic instability and a growing grey market of illegal and under-invoiced goods hurt a manufacturer’s pricing structure and its ability to plan for future,” she argued. “On top of these, there is this issue of inconsistency in policies. Every (foreign) investor wants to have a reliable policy environment and tax and other incentives for the next 20 or 25 years to plan for the long term.

“Just consider the example of the customs duty for TV assemblers in Pakistan. When we came here five years back, it was five per cent. Today it is 30pc, including 10pc regulatory duty (RD). Similarly, the dollar was priced at Rs99. Today it has fallen to Rs140. Can we pass on the full impact of higher tariffs and exchange rate depreciation to consumers? No, we cannot. The presence of illegal, grey market makes it even more difficult for a company like ours to recover the cost. These things don’t affect us alone. Every business in Pakistan is facing these problems,” she says.

Although total investment as a percentage of GDP has increased slightly in the last five years — from 14.6pc in 2014 to 16.4pc in 2018 — it is half the investment-to-GDP ratio of 30pc in India and Bangladesh. On top of that, private gross fixed investment (GFI) has decreased by 10 basis points from 9.9pc to 9.8pc during the same period.

TV sales by different foreign and local brands are believed to be around 1.2m a year. Their demand is growing at an annual rate of 10-12pc

Similarly, foreign direct investment (FDI) inflows have also risen slightly to $2.7 billion a year during the last two financial years on the back of Chinese investments in power and other infrastructure projects.

Board of Investment (BoI) Chairman Haroon Sharif agrees with Ms Sunny’s assessment of the factors impeding fresh (foreign) investment in Pakistan. “We are aware of these issues… foreign investors need protection and we’re making decisions that are required to improve the business environment to attract FDI flows,” he told this correspondent recently.

Ms Sunny said the demand for high-end electronic goods was growing in the country as Pakistani consumers became more aware of global brands and technology. “For the last few years, the market has been shifting towards bigger-sized panels and smart and 4K TVs. This is a positive development for our company because we already have a strong presence in this market.”

TV sales by different foreign and local brands, for instance, are believed to be around 1.2m a year. Their demand is growing at an annual rate of 10-12pc.

“Pakistan is a tough market, but has a lot of potential. We think Pakistan’s TV sales volume should have been three to four times bigger than its current size given the country’s large population. In view of this potential, we are looking for increasing our presence in this market and introduce our white goods and mobile phones,” she said.

She was hopeful about a spike in the demand of electronic goods in Pakistan once economic growth picked up pace and the China-Pakistan Economic Corridor completed. “Going forward, we are hopeful that the problems (facing foreign investors) will be taken care of and an environment conducive for doing business created.”

Published in Dawn, The Business and Finance Weekly, December 3rd, 2018

https://www.dawn.com/news/1448966

China: IMF pressure won’t weaken Pakistan’s CPEC commitment

November 28, 2018

Global Times report by Zamir Ahmed Awan states that Pressure and challenges from the IMF regarding debt woes over the China-Pakistan Economic Corridor (CPEC) won’t compromise Pakistan’s commitment to the CPEC.

(AFP photo)

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Pakistan is experiencing a deep economic crisis, and the nation is facing a burden of foreign debt of $95 billion.

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Overseas Pakistanis have been sending their earnings to their family members in Pakistan, which for a long time was a good source of foreign exchange earnings for the government of Pakistan. But due to mismanagement, poor planning and corruption, these remittances have been decreasing over time.

http://www.arabnews.com/node/1412426/press-review

Also, the Pakistani rupee has weakened against the strengthening US dollar, resulting in a decline in Pakistan’s foreign exchange reserves. This, along with the difficulty Pakistan faces in repaying its debts, has worsened the country’s economic problems. These led Pakistan to seek a bailout package from the IMF.

The IMF team has been in Pakistan recently and negotiations started over a bailout, which included many conditions, including details of CPEC agreements. Although Pakistan was in dire need of financial assistance and could accept some of the IMF’s monetary conditions, it could not compromise regarding the CPEC.

Pakistan’s involvement in the CPEC is backed by the whole country, and this won’t change even if there is a new government. The CPEC is an essential element of Pakistan’s national strategy, and we believe it is the only way forward for Pakistan. So the IMF’s pressure can only prompt Pakistan to strengthen its ties with China. We are already good and trustworthy friends.

The US has used the World Bank and IMF as tools to exert its political hegemony in the past and it still does so. Secretary of State Mike Pompeo has previously warned against any IMF bailout for Pakistan that would pay off Chinese loans to Pakistan. Categorically, they asked not to fund any project that is part of the CPEC or backed by China. They wanted us to guarantee there would not be any transfer of funds to China.

It is obvious that the US does not accept China’s rise and is trying to restrain it. The US will use all necessary means to put pressure on China and anyone entering into a partnership with it. The US aims to pressurize Pakistan as a way to limit China’s further economic development. But Pakistan enjoys a very special relationship with China and wants to take this friendship to new heights.

China has established the Asian Infrastructure Investment Bank (AIIB), which is helping developing countries to improve their infrastructure. The bank works on the basis of merit and without any political prejudice. India offers an example of this. India has been skeptical about the Belt and Road initiative (BRI) and has had a sometimes difficult relationship with China, but India has already been one of the beneficiaries of AIIB loans. Many other developing countries have received AIIB loans and are satisfied with its policies.

It is time to establish an Asian Monetary Fund in order to help developing economies based on merit only, without any political motives. The IMF is bound by US influence and functions as an economic wing of US foreign policy. Many developing countries have been victims of harsh IMF terms and want to get rid of IMF control. I think China has the experience and resources to come up with new initiatives, and the developing world would appreciate and support it.

There is a visible divide in the world, between those who are pro-globalization and those who believe in protectionism. Creation of a new funding institution would put China in a position of global moral leadership. Developing countries would extend their support for globalization and Chinese initiatives like the BRI, free from external monetary coercion. Pakistan, being an all-weather, time-tested friend, will stand with China at all times.

The author is a non-resident fellow with the Center for China and Globalization and a professor at the National University of Sciences and Technology in Islamabad, Pakistan. bizopinion@globaltimes.com.cn

Newspaper headline: Pressure won’t weaken Pakistan’s CPEC commitment

http://www.globaltimes.cn/content/1129236.shtml

IMF ready to link Pakistan bailout to crackdown on money laundering, terror funding and financial details of its deals with China

November 26, 2018

Pakistan’s hopes of getting a $6 billion lifeline may hinge on how it responds to demands for a crackdown on money laundering, terror funding and financial details of its deals with China

 NOVEMBER 26, 2018 5:37 PM (UTC+8)
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Pakistani Finance Minister Asad Umar. Photo: Wikipedia

Pakistani Finance Minister Asad Umar. Photo: Wikipedia

Imran Khan Says Karachi Attack Caused by Chinese Trade Deals

November 23, 2018

Pakistan’s Prime Minister Imran Khan said Friday’s assault on China’s diplomatic mission in Karachi was due to trade deals signed between the two nations earlier this month.

Image result for Pakistan rice farmers, photos
More of Pakistan’s agriculture and food is being exported to China

“The failed attack against the Chinese Consulate was clearly a reaction to the unprecedented trade agreements that resulted from our trip to China,” Khan said on Twitter. “The attack was intended to scare Chinese investors — these terrorists will not succeed.”

Imran Khan

@ImranKhanPTI

The failed attack against the Chinese Consulate was clearly a reaction to the unprecedented trade agreements that resulted from our trip to China. The attack was intended to scare Chinese investors and undermine CPEC. These terrorists will not succeed.

3,933 people are talking about this

Separately, a bombing in northwestern Orakzai killed at least 25 people on Friday, local media reported. The former cricket star condemned both attacks and said they were “part of a planned campaign to create unrest in the country by those who do not want Pakistan to prosper.”

The assault in Pakistan’s largest city and financial hub left seven people dead. The incident is the second major attack this year on Chinese officials in Karachi, a megacity of at least 15 million people in a country that is one of the key partners in China’s Belt and Road initiative. In February gunmen killed Chen Zhu, a shipping executive, in the city’s posh Zamzama district. The violence has raised concern in Beijing, which is financing infrastructure projects valued at about $60 billion across Pakistan.

An explosive-laden vehicle was driven outside the Chinese consulate and in an exchange of fire two policemen guarding the building and all three assailants were killed, Amir Shaikh, a senior police official, told reporters in Karachi. Two civilians collecting visas also died. Pakistan’s Foreign Minister Shah Mahmood Qureshi later told lawmakers in Islamabad that a suicide bomber had detonated explosives while trying to enter the building.

The raid will come as a shock to China and Pakistan’s armed forces, which have beefed up security across the South Asian nation after a number of military operations targeting terrorist groups since 2013. Pakistan’s army has also raised a 15,000 strong force to protect the Chinese projects and has curtailed the movement of workers at those sites who aren’t allowed outside without an armed escort.

Pakistani security personnel stand outside the Chinese consulate after an attack in Karachi on Nov. 23.

Photographer: Asif Hassan/AFP via Getty Images

Beijing has become increasingly vocal over the risks in Pakistan. In December last year, its embassy in Islamabad warned of imminent terror attacks on Chinese targets. That followed the Islamic State-claimed killings of two Chinese teachers in June 2017 in the restive southwestern province of Balochistan, where China is building a port.

“China has requested Pakistan to take measures to make sure the safety of Chinese citizens and organizations,” Geng Shuang, a foreign ministry spokesman, said at a daily briefing in Beijing on Friday. “China believes that Pakistan will take measures to make sure that China-Pakistan Economic Corridor proceeds smoothly,” he said, referring to the local branding of Belt and Road in Pakistan.

‘Similar Attacks’

Pakistan’s Foreign Ministry spokesman Mohammad Faisal told reporters in Islamabad that it is too early to know who is responsible. Reuters reported that the Balochistan Liberation Army, a separatist movement in the restive province neighboring Karachi, claimed the attack.

“Similar attacks targeting Chinese engineers and businessmen happened in the past to force Pakistan’s government to back down from certain issues,” said Sun Shihai, director of the Institute of South Asia Studies in Sichuan University of China. “These individual attacks will only raise the awareness of Pakistan and China’s governments to put more emphasis on security.”

China’s influence has increased across Pakistan in recent years. Islamabad has also pivoted to Beijing as relations with the U.S. are increasing strained under President Donald Trump, who canceled military aid to Pakistan this year. Trump has repeatedly accused Pakistan of sheltering insurgent groups who operate in Afghanistan — a charge refuted by Pakistani government and military officials.

‘Debt Diplomacy’

Yet resentment toward the Chinese is also rising. Critics say Beijing is ensnaring Pakistan in so-called “debt diplomacy” by granting opaque loans that Islamabad will find difficult to repay as it faces a balance-of-payments crisis. Pakistan is currently negotiating a bailout with the International Monetary Fund.

Many Pakistani firms also grumble about the preferential treatment being meted out to Chinese businesses since 2015 when President Xi Jinping first launched the China-Pakistan Economic Corridor.

Friday’s attack is “a very high profile attempt which failed but nevertheless it causes concerns” that there are people opposing China’s mega projects in Pakistan, said Hasan Askari Rizvi, a Lahore-based political analyst and former government official.

— With assistance by Faseeh Mangi, and Kamran Haider

Pakistan jolted by a deadly market bombing and an attack on the Chinese Consulate

November 23, 2018

A powerful bomb at an open-air food market in northwest Pakistan’s Tribal Areas killed 25 people, an attack just hours after armed separatists stormed the Chinese Consulate in the southern port city of Karachi.

Local police official Tahir Ali said the market attack took place in the town of Klaya, in the Orakzai region of the Khyber Pukhtunkhwa province, which borders Afghanistan.

He said most of the victims were minority Shiite Muslims. More than 50 were wounded in the attack, some critically, triggering fears the death toll could rise further,

Ali said the attack has prompted local authorities to declare an emergency at the region’s hospitals. Orakzai has been the scene of militant attacks in recent years, mostly claimed by Pakistani Sunni militants.

Also Friday, Pakistan’s foreign minister said security forces foiled an attempt by militants to spread terror by attacking the Chinese Consulate in Karachi.

Separatists attack Chinese consulate in Pakistan, killing 4
Pakistani troops move in the compound of Chinese Consulate in Karachi, Pakistan, Friday, Nov. 23, 2018. Pakistani police say gunmen have stormed the Chinese Consulate in the country’s southern port city of Karachi, triggering an intense shootout. (AP Photo/Shakil Adil) (Shakil Adil)

Shah Mahmood Quershi described the attack as a “conspiracy” against Pakistan and China, its longtime ally and friend. He blamed the “enemy of Pakistan” for the attack.

Three gunmen stormed the consulate in Karachi, triggering an intense, hour-long shootout during which two police officers and all the assailants were killed, officials said.

All the Chinese diplomats and staff at the consulate were safe and were not harmed during the assault or the shootout, said senior police official Ameer Ahmad Sheikh.

The Baluch Liberation Army, a separatist group based in the southwestern province of Baluchistan, claimed responsibility for the attack and released photos of the three attackers. Karachi, the capital of neighboring Sindh province, has a militant presence, including Baluch separatists.

The attackers stormed the consulate shortly after 9 a.m., during business hours. They first opened fire at consulate guards and then managed to breach the main gate and enter the building, said Mohammad Ashfaq, a local police chief.

Pakistani security forces quickly surrounded the area. Local TV broadcast images showing smoke rising from the building, which also serves as the residence of Chinese diplomats and other staff.

Multiple blasts were heard soon afterward but Sheikh could not say what they were. After the shootout, which lasted for about an hour, the situation was brought under control.

“Because of a quick response of the guards and police, the terrorists could not” reach the Chinese diplomats, Sheikh said after the fighting ended. “We have completed the operation, and a search is still underway to trace and capture all suspects.”

Sheikh said one of the attackers was wearing a suicide vest. Authorities will try to identify the assailants through fingerprints.

Dr Seemi Jamali, a spokeswoman at the Jinnah Hospital, said the bodies of two police officers were brought to the hospital morgue and a wounded consulate guard is under treatment.

China is a longtime ally and has invested heavily in transport projects in Pakistan. The two countries have strengthened ties in recent years and China is currently building a network of roads and power plants under a project known as the China-Pakistan Economic Corridor, or CPEC.

Associated Press

Pakistan, China next phase of development — Pak to ship more food to China

November 16, 2018

Islamabad and Beijing on Thursday decided to prioritize the conclusion of projects under the China-Pakistan Economic Corridor (CPEC) that are associated with Pakistan’s port city of Gwadar, ahead of a Joint Cooperation Committee (JCC) session scheduled tentatively for the first week of December in Beijing.

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The JCC is CPEC’s lead policymaker. Seven ministerial sessions of the committee have been held since the project’s inception.

In this file photo, Chinese trucks stand on a pontoon during the opening of a trade project in Gwadar port, some 700 kms west of the Pakistani city of Karachi on Nov. 13, 2016. (AAMIR QURESHI/AFP)

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The two sides agreed to focus on the new Gwadar international airport, socioeconomic development, a hospital, and professional and technical institutes.

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Pakistan has emphasized improvement of its railways, special economic zones and third-country participation, which will be discussed at the eighth JCC meeting.

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Sen. Mushahid Hussain, chairman of the Pakistan-China Institute, told Arab News: “The best of CPEC is yet to come. Total outlay as of now is $61 billion, which is the single biggest bilateral project between two countries since World War II.”

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He said: “The next phase of CPEC includes agriculture, culture, tourism, information technology, education and youth exchanges.”

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Li Xiguang, director of China’s Tsinghua University, told Arab News that if both governments negotiate a mutually beneficial deal on Pakistani agricultural exports, especially cotton and sticky rice, “that would sell very well in China and fetch a high price.”

Image result for Pakistan, growing sticky rice, photos

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Li praised soil quality across the four provinces of Pakistan, whose agriculture sector makes up to 20 percent of its gross domestic product (GDP) and has attracted Chinese entrepreneurs seeking land for farming since CPEC’s inception.

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Hussain said: “You’re looking at job creation, manufacturing, and a better tomorrow for our people.”

Arab News

http://www.arabnews.com/node/1405866/world

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Pakistan: IMF Says Government Electricity Regulation Partly Responsible for Repeated Emergence of Circular Debt

November 15, 2018

Appreciating the role of China-Pakistan Economic Corridor (CPEC) in addressing energy shortages, the International Monetary Fund (IMF) has asked the government to give up its powers on notification of electricity rates, determined by the National Electric Power Regulatory Authority (Nepra), as a key tool to end repeated emergence of circular debt.

Informed sources told Dawn that a major chunk of the circular debt has been coming up because of the time consumed in tariff determination by the regulator on petitions filed by power companies and then its back and forth exchange with the government for notification.

Updated
November 15, 2018
Islamabad:  Federal Minister for Planning, Development and Reform Makhdoom Khusro Bakhtyar talking to the IMF mission on Wednesday.
Islamabad: Federal Minister for Planning, Development and Reform Makhdoom Khusro Bakhtyar talking to the IMF mission on Wednesday.

These sources said the visiting delegation wants authorities to make further amendments to the Nepra Act to ensure automatic notification of quarterly, annual and multi-years tariffs, determined by the regulator on the pattern of monthly fuel price adjustment which is notified directly by Nepra.

Says automatic notification will check re-emergence of circular debt

The base tariff, on the other hand, sometimes consumes more than a year and in recent years has lingered on for over two years due to litigations by power distribution companies with the backing of the Power Division.

“The amendments are already being discussed in this regard to ensure that the regulator receives tariff petitions on templates and determines rates under a pre-determined formula and performance standards in a time-bound manner and then stand automatically notified within the shortest possible manner,” an official said.

Informed sources said the Fund delegation has already held three sessions with the Power Division authorities besides discussing these challenges with the finance ministry. On Thursday, the IMF mission would have a rare direct interaction with the chairman, members and top officials of the power regulator at Nepra Headquarters to have an independent view of the regulator on power sector issues and challenges.

On Wednesday, the IMF mission, led by chief Herald Finger, visited the Planning Commission and noted that CPEC has played a crucial role in substantially increasing power production in a short period of time that would aid in achieving sustained economic growth.

The Planning Commission team was led by Federal Minister for Planning, Development & Reform Makhdum Khusro Bakhtyar and comprised Secretary Planning Zafar Hasan, and CPEC Project Director Hassan Daud Butt and senior officials. The mission is expected to hold another in-depth session with the commission.

The minister told the mission that economic and social objectives of the government were to protect and provide relief to the marginalised segments of society by prioritising focus on human resource development, social security and job creation.

Keeping in view the economic situation, the government had already rationalised Public Sector Development Programme (PSDP) by almost 35 per cent with its throw-forward liability brought down to a manageable level. He said the PTI government inherited a fragile economy and it has taken a number of corrective measures to revive and put it on the path to sustained growth.

The IMF delegation was told that emphasis was being laid on attracting investments in areas where it can lead to direct impact on exports or reducing the import bill and new ways of financing were also being explored. He said the projects that are run on imported fuel will not be encouraged.

Also, the government is now paying attention on improving electricity transmission system in the wake of increased power generation capacity. The minister underlined that robust economic planning was being made to enhance tax-to-GDP ratio by increasing the domestic revenue.

Talking about CPEC, the minister said that the mega project had now entered into its second phase with focus on industrialisation, socio-economic initiatives and joint ventures, especially in agriculture sector to increase productivity as well as improve irrigation network system. He noted that CPEC in its first phase had helped a great deal in boosting power generation.

Published in Dawn, November 15th, 2018

https://www.dawn.com/news/1445652/imf-wants-end-to-govts-role-in-power-tariff-determination

Pakistan: Chinese-backed coal power project will fuel nine new power plants

November 15, 2018

In Pakistan’s bleak Thar desert, the roar of trucks is constant at a massive Chinese-backed coal power project the government sees as an answer to chronic energy shortages, but which activists warn is an environmental disaster.

Machines are running round the clock to finish the mine and coal power plant, a flagship project of the China-Pakistan Economic Corridor (CPEC) plan that has seen Beijing provide billions of dollars in financing to its southwestern neighbour.

Much of it is for infrastructure and power in a country where blackouts have infuriated citizens and hamstrung the economy for years.

Image result for Sindh Engro Coal Mining Company, photos

And while coal is going out of vogue in most other parts of the world because of its environmental impact, it will fuel nine of the 17 proposed CPEC power plants.

The one in Thar in southern Sindh province sits atop 175 billion tonnes of coal — one of the largest deposits in the world. Discovered in 1992, it has remained unexploited until now, but is expected to yield 3.8 million tonnes a year when fully operational.

A few kilometres away, towering chimneys emerge from the sand dunes as Pakistani and Chinese workers toil away on a 660-megawatt power plant which will burn coal from the mine.

After struggling for years to upgrade its power infrastructure, Pakistani leaders have touted CPEC as a “game changer” that will help lift the ailing economy, dismissing concerns that Chinese financing will lead to unsustainable debts and that the projects are boosting Beijing’s interests at Islamabad’s expense.

“We are five months ahead of schedule,” said Shams Shaikh, director-general of the Sindh Engro Coal Mining Company (SECMC), a joint China-Pakistan venture that has invested around 1.7 billion euros ($1.9 billion) in the Thar mine-and-plant project.

Experts say the site should be able to produce 200,000 MW of electricity over the next hundred years — a boon for the energy-starved country where demand increases by eight percent each year, according to official statistics.

– Water warning –

Despite the fanfare and government assurances, the project has triggered concern about its impact on the environment.

The type of coal in Thar is lignite, notorious for its poor energy efficiency and high carbon dioxide emissions.

Project officials insist its operations will comply with national and international environmental laws.

But mining coal and burning it for power are water-intensive activities, and villagers in this impoverished, vast stretch of desert say the project is playing havoc with local supplies.

Underground rivers which previously flowed into the mine have been diverted, and residents of Gorano, a small village some 25 kilometres (15 miles) from the coal project, claim their pastures have been transformed into a salt lake due to water diversions and the dumping of waste.

“It’s complete chaos,” said Raja who goes by one name, while another local, Yameen Bhatti, added: “The (diverted) water has attracted mosquitoes, which spread diseases.”

SECMC says it has given 950 million rupees ($7 million) to the community as compensation, but after the floodwaters recede, experts warn the residents will probably continue to struggle as the thirsty power project will consume a huge amount of ground water.

Environmental concerns about Pakistan’s coal spree go beyond the villages of Thar. The UN has warned that the country risks an “absolute” water shortage by 2025, and activists have warned about the impact of such industries on increasingly scarce water supplies.

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Officials have said that the country’s new coal plants will use the most efficient technology available to minimise pollution.

– Coal vs renewable energy –

Pakistan’s push to build coal-fired plants comes amid a global drive to replace fossil fuels with renewable energy like solar and wind.

“While the rest of the world is abandoning coal, we are throwing ourselves into this disaster,” said Omar Cheema, an environmental expert.

Some experts and officials have also suggested it would be cheaper to invest in renewables as the price of solar and wind is dropping, and several international studies have also shown that coal is no longer competitive.

Irfan Yousuf, director of renewables at the Ministry of Energy, estimated the per-kilowatt price of solar power at 4.8 rupees, compared with 8.5 rupees for coal.

But Pakistani authorities argue that using local coal would help cut fuel imports, saving precious billions in foreign exchange, and would also provide reliable power round the clock, unlike fluctuating output from renewable sources.

Some have compared Pakistan with neighbouring India, which has announced ambitious plans to invest in renewable energy. But India is heavily dependent on coal, which provides more than 75 percent of its electricity.

In Pakistan, it accounts for less than one percent.

AFP