China Watch

China Watch [January 14 – January 20] Pakistan to shelve major CPEC power project

The Pakistan government has decided to shelve a major coal-based power plant project under the $60 billion China-Pakistan Economic Corridor, citing sufficient generation capacity already lined up for the next few years. PM Imran Khan prioritised four key areas under CPEC for the next couple of years and ordered the groundbreaking of at least three special economic zones before end-June this year. According to the data provided by the State Bank of Pakistan, the Foreign Direct Investment from China has increased by a massive 45.26%, with a total investment of $1,104.2 million. Pakistan Ambassador to China, Masood Khalid said that Pakistan will follow the Chinese model in the establishment of its industrial parks and special economic zones in different regions under CPEC framework. Federal Minister for Energy, Omar Ayub Khan during his meeting with the Ambassador of China to Pakistan, Yao Jing, said that Pakistan is aiming to increase its renewable energy share to 30%, as currently the electricity produced by renewable sources is a meager 4%.

Please read below for additional details in this edition of China Watch [January 14 – January 20] by CRSS. 

Pakistan to shelve major CPEC power project:
The Pakistan government will shelve a major coal-based power plant project under the $60 billion China-Pakistan Economic Corridor (CPEC), citing sufficient generation capacity already lined up for the next few years.[i]The previous Pakistan Muslim League-Nawaz (PML-N) government had pushed for the construction of the 1,320 MW Rahim Yar Khan power project by China. The Pakistan Tehreek-i-Insaf (PTI) government officially requested the Chinese friends to formally delete the project from the CPEC list.[ii]

During the 8th Joint Coordination Committee (JCC) meeting held last month, a Pakistani delegation led by Minister for Planning and Development Makhdoom Khusro Bakhtyar “proposed to remove the Rahim Yar Khan imported fuel power plant from the CPEC list, in order to provide structure optimization space for the subsequent power market of Pakistan,” said an official, quoting minutes of the December 20 JCC meeting.

Four key areas under CPEC prioritized:
During a meeting on the review of CPEC, Prime Minister Imran Khan has ordered that four Special Economic Zones (SEZs) planned under CPEC be materialized before the end of June this year. The four SEZs which are now being prioritized for June are the Rashakai Economic Zone, Dhabeji Economic Zone and the Faisalabad M-3 Industrial Estate and one in Islamabad. Rashakai, Dhabeji and Faisalabad would be ready for groundbreaking by June this year, starting with Rashakai in two to three months. However, IT SEZ in Islamabad would take more time for various reasons including but not limited to selection of its site and then land acquisition process. The PM also ordered to establish investor friendly policies to aid the Chinese investors who are keen on investing in these SEZs.[iii] 

Chinese investment jumps 45.26% in first half of FY19:
According to the data provided by the State Bank of Pakistan (SBP), the Foreign Direct Investment (FDI) from China has increased by a massive 45.26%, with a total investment of $1,104.2 million in the first half (July-December) of the current fiscal year against the investment of $760 million recorded during the same period of last year. A spokesperson of the ministry of Finance took to twitter to say that the government has established investment friendly policies to promote “ease of doing business,” that has resulted in an overall 17% increase in FDI in the country.[iv]

Chinese model to be followed in Special Economic Zones construction: Pak Ambassador:
Ambassador of Pakistan to China, Masood Khalid, said that Pakistan and China have reached the next phase of CPEC, with the establishment of industrial cooperation. He said that the nine proposed SEZs will be constructed through learnings from China, as China is the pioneer of developing successful SEZs. He also said that CPEC has achieved rapid progress in energy and infrastructure, with 11 projects completed and 11 under construction. He also said that Gwadar port is developing rapidly and will become the future economic hub of the region.[v] 

Pakistan looks to rely heavily on renewable energy by 2030:
Federal Minister for Energy, Omar Ayub Khan during his meeting with the Ambassador of China to Pakistan, Yao Jing, said that Pakistan is aiming to increase its renewable energy share to 30%, as currently the electricity produced by renewable sources is a meager 4%. The minister also talked about the smart meters initiative and the hugely untapped potential in country for renewable energy. He said Pakistan was looking to increase its reliance on the renewable energy resources, including wind, power, hydel and solar energy, to make the power generation more environment-friendly. [vi] The Ambassador welcomed this initiative and said that energy sector is a crucial part of CPEC.

While talking about huge investment potential in the solar panel market, smart meters and other distribution and transmission system equipment including anti-fog insulators in Pakistan, the minister said that Chinese investors can take full benefit of these opportunities.[vii]

This report is compiled and written by Syeda Uruba Nisar, Social Media Associate at the Center for Research and Security Studies (CRSS), Islamabad.

Notes:

[i] Pakistan to shelve major CPEC power project. (2019, January 14). Gulf News. Retrieved January 21, 2019, from https://gulfnews.com/business/energy/pakistan-to-shelve-major-cpec-power-project-1.61425735

[ii] Pakistan shelves key China-backed CPEC power project citing enough capacity. (2019, January 14). Business Standard. Retrieved January 21, 2019, from https://www.business-standard.com/article/international/pak-decides-to-shelve-key-cpec-power-project-citing-enough-capacity-119011400251_1.html

[iii] Kiani, K. (2019, January 19). Four key areas under CPEC prioritised. DAWN. Retrieved January 21, 2019, from https://www.dawn.com/news/1458411

[iv] Chinese investment jumps 45.26% in first half of FY19. (2019, January 18). Daily Pakistan. Retrieved January 21, 2018, from https://en.dailypakistan.com.pk/business/chinese-investment-jumps-45-26-in-first-half-of-fy19/

[v] Hashmi, F. (2019, January 18). Chinese Model To Be Followed In Special Economic Zones Construction: Pak Ambassador. Urdu Point. Retrieved January 21, 2019, from https://www.urdupoint.com/en/pakistan/chinese-model-to-be-followed-in-special-econo-533102.html

[vi] Pakistan looks to rely heavily on renewable energy by 2030. (2019, January 18). Xinhua Net. Retrieved January 21, 2019, from http://www.xinhuanet.com/english/2019-01/18/c_137752591.htm

[vii] Renewable energy share to be raised to 30pc by 2030: Omar. (2019, January 18). The News. Retrieved January 21, 2019, from https://www.thenews.com.pk/print/420521-renewable-energy-share-to-be-raised-to-30pc-by-2030-omar

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