Some say that the loans on CPEC are unbearable. While others say that CPEC is a goldmine. Actually they’re both right 🙂
Long Live Pak-China Friendship!
Today, I come with the most important article about CPEC. So please read until the end Otherwise, you can miss an important piece of the story. In the last post we looked over China’s intentions. Why is China making stakes of 50-60 billion USD in Pakistan. What is China thinking?What benefits is China seeking? And, how big of a risk is China taking? And, what’s America’s role in this whole scenario? And, how is Pakistan becoming a big player in this (great) game? Now, let’s move on Since 2013, when CPEC became famous in Pakistan, Pakistan Government is giving it names such as Game-Changer and Fate-Changer And, the government is showing as if they’ve conquered Rome. Every other day, there’s a CPEC seminar taking place Some big statements are being issued Something CPEC related just keeps happening. But the problem is that everyone knows the term CPEC But, accurate information about CPEC is scarce. Politicians don’t properly give answers, Neither in talk shows, nor anywhere else. For our this CPEC series, we contacted everywhere The Planning Commission Knocked at the door of Ministry of Planning and Reforms Emailed, texted and sent messages on social media to all the members of Parliamentary Committee on CPEC But no one responded Neither from the Government, nor from the opposition. These very habits of our politicians give fuel to the fire and help the false rumors spread. They have not learned to speak the truth While lies get caught in today’s age. So they have decided to stay silent.
Anyhow, even if the Government and politicians refuse speak that doesn’t mean we won’t find any information. Print media has published detailed accounts on every aspect of CPEC. So, we put on our reading glasses. We had to do a lot of digging because
no one openly speaks out these facts. But, after a lot of reading, when eyes became groggy CPEC’s image kept getting clearer. Even though CPEC is exceeding the budget of $60 billion But at the core, it is a 46 billion US Dollars project. So, the question is that if only a road was required to connect Khunjrab to Gwadar It doesn’t require 46 billion Dollars it would require no more than 1-2 billion Dollars. Besides, Pakistan already has very decent road network. Many experts believe that this is the best road network in the region. So, where are these 46 billion Dollars going to be spent? 34 US Dollars are dedicated for energy projects. Almost all of the false rumors spreading around about CPEC, are because of these power projects. Most of these projects are called Early Harvest Projects (EHP) Which means that these projects will be completed in the first phase of CPEC. Many of these projects have already started working While others will start working by the end of 2018. These projects are causing all the friction.
Some time ago, a report was published that said Pakistan will have to pay 7 – 8 percent interest on these projects. This report is 100% true and we shall have to pay this interest. Those people, who don’t like Pakistan or China, are saying that the whole of CPEC is a loan and the weight of these loans so big that poor Pakistan can never bear it and that China has actually invaded Pakistan economically Because, if you take a loan from someone and you’re unable to pay it back then the lender comes and seizes your property. China will do the same. But, it is not that simple. Actually, it’s a little complicated.
Complications start from the energy crisis. When China was proposing CPEC to Pakistan, Pakistan had a severe short fall of electricity. There wasn’t any point of building CPEC, If there wasn’t any electricity Pakistanis knew this problem very well. But, how do you produce so much electricity. If you want to quickly complete power projects You will have to rely on fossil fuels. Hence, many coal and LPG based power plants became a part of CPEC. And work started on them at rocket-speed. Work was done at such pace that Sahiwal Power Plant, that produces 1300 MW electricity was completed six months earlier than its completion date, and started working. But, interest on such power-plants is quite high Because this is almost an outdated technology and its running cost is quite high. The electricity produced through it costs a lot About Rs. 11/- to Rs. 15/- per unit. So, as soon as hydel power projects get completed Pakistan will stop using these power plants. And that’s why, the investors have to get their returns within 5 to 10 years. That’s the reason behind high interest rates but it doesn’t mean that all power projects require loans. There’s a hydel power project of 720 MW is building up in Karot That will produce cost-effective energy at about Re. 1/- per unit the cost of this project is around 1.5 billion dollars, but forget interest rates, this isn’t even a loan China is making Foreign Direct Investment on this dam. This is a long-term project That is the reason China did not think about putting this project on loan. They directly invested CPEC includes other projects as well such as roads, up-gradation of railway tracks from Peshawar to Karachi. And, a digital corridor is also being set up That will send to big fiber-optic links from China to Pakistan. That will make the internet blazing fast in Pakistan. The interest rates on such long-term projects is either very low, or they come under FDI And, China is making a lot of direct investment in CPEC. Almost all of the work being done in Gwadar is direct investment. Deep sea port has started functioning, free zone is developing Gwadar International Airport is built.
It is all direct investment There’s one though, China will take 91% profit on Gwadar port Pakistan will only get 9% But we have to realize that China is making huge investments in Gwadar Those investments will create so many jobs, Balochistan will develop rapidly. Pakistan’s exports will rise and tourists will come in Pakistan. All these factors should be taken into account Even if we get only 9% profits, we don’t have anything to lose. Pakistan doesn’t have enough resources to turn Gwadar into Singapore. So, if China is making an offer, there’s no point rejecting it. So, in clear-cut language, CPEC gives a lot of benefits. Jobs will be created, tourists will come and industries will grow. IT sector can grow at miraculous pace. Another submarine cable link is also connecting Gwadar And the Pak-China digital corridor is also being set up. And of course, roads and motorways are also being built. A rail will pass through the Karakorams which is just might be world’s most stunning rail-ride. But, in the coming years, the cost of electricity will stay high in Pakistan. Because we have taken high-interest loans for power projects. The big long electricity bills – as they come every month – will keep on coming. But CPEC shouldn’t be blamed for this. The governments of 1980s and 1990s should be blamed for this high cost of electricity who did not start any dams.