China to invest $50b to develop Indus River Cascade

Published: May 13, 2017
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PHOTO: REUTERS/FILE

PHOTO: REUTERS/FILE

ISLAMABAD: In a major development that may attract $50 billion Chinese investment to Pakistan, Islamabad is expected to sign an MoU with Beijing on Saturday (today) for financing and developing the North Indus River Cascade which has the potential to generate 40,000MW hydro electricity.

The $50 billion investment comes on top of the $46 billion investment being provided by the Chinese government and Chinese banks for financing power and road infrastructure projects in Pakistan under the China-Pakistan Economic Corridor (CPEC).

With the signing of the MoU – which will be witnessed by Prime Minister Nawaz Sharif who is on an official visit to China – Beijing will emerge as the biggest financier of infrastructure projects in Pakistan.

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According to the studies conducted by the Water and Power Development Authority (Wapda), Pakistan has an identified potential of producing up to 60,000MW of hydroelectric power.

Some 40,000MW of this potential power is located in the region called the Indus River Cascade, which begins from Skardu in Gilgit-Baltistan and runs through Khyber-Pakhtunkhwa as far as Tarbela, the site of Pakistan’s biggest dam in.

The Indus River Cascade includes Diamer-Bhasha Dam project for which Pakistan needs $15 billion financing. Other multilateral donors were not willing to invest on this project but now China has come up to finance this mega project.

Sources said the Chinese side conducted survey and studies on the North Indus Cascade including the sites of Pattan, Thacoat, Bunji, Dasau and Diamer in February 2017.

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The Chinese side in their last high-level meeting agreed to convert the survey and initial study to an MoU whereby the Chinese will conduct a detailed study spanning over a period of three months on a developing roadmap for financing that will lead to initiation and completion of these mega projects.

Sources said this will be Pakistan’s first-ever private sector investment in mega projects in hydel resources as until now only Wapda led such projects. The most important development could be the Chinese undertaking of these projects as it has a vast experience for building such huge dams.

According to the sources, the CPEC and the North Indus River Cascade can be the biggest-ever Chinese investment in Pakistan.

In 2015, the owner of the world’s largest hydroelectric dam, China Three Gorges (CTG) Corporation, had expressed willingness to participate in a financing consortium to fund up to $50 billion of hydroelectric power projects in Pakistan.

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The Chinese government-owned CTG expressed an interest in financing projects in Pakistan in conjunction with the International Finance Corporation, a World Bank subsidiary.

The CTG owns and operates the Three Gorges Dam, the world’s largest hydroelectric power plant with a capacity of 22,500MW, nearly matching in one power plant the entire installed capacity of the Pakistani grid of 23,500MW.

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Reader Comments (13)

  • abreez
    May 13, 2017 - 10:27AM

    Step in the right direction, Pakistan needs more dams and more dams will mean more coastal cities in Pakistan. In 2025 Karachi will contribute more than $200 billion in Pakistani economy and if by then Pakistan will have five or six coastal cities one can imagine each city contribution in Pakistani economy. Pakistani coastal cities will progress faster than any other coastal city of the region as these cities will find labor, oil, raw material and investors very easily.Recommend

  • kafayat
    May 13, 2017 - 4:57PM

    Pakistan will paid 5$ bn per annum to china from 2020 from profit from CPEC profit so no worry about that. In case of 50$ bn investment or loan for const of dams and 40000 mgw ekecricity, these amount be recovered from electric profit within 7 yrs. So welcome these investment.Recommend

  • rustam
    May 13, 2017 - 5:04PM

    @ Nitin Ramola – Your comments reflect exactly what the attitude of Modi’s government is. Thanks for exposing the Modi’s true policy for “co-existence with the neighbors”. Recommend

  • Irtaza Malik Awan
    May 13, 2017 - 6:42PM

    This almost sounds too good to be true. But then again Napolean said of China that when Chine awakens it will shake the world! Only the Chinese can think, plan and then successfully execute projects of this magnitude. Not even the U. S. A.Recommend

  • Bunny Rabbit
    May 13, 2017 - 8:55PM

    If the pictures are anything to go by, its a fertile green land , so , why not , if CPEC thing works , then tourism will be the top industry . Hope this becomes another silk route of our medieval ages . Recommend

  • Qazi sohail
    May 13, 2017 - 9:17PM

    It is a huge investment and sounds to good to be true but what is the mode of investment. Is it BOT or other one and also what is the rate of return to them and what will be the price of electricity offered to public after these projects. The Chinese are paid ultra high profit margins in coal based projects. So it is seen whether the same trend will continue. If this the case then it will not help Pakistan having cheap electricity instead it will increase the industrial cost and make our products very less compettiveRecommend

  • Jaffar Akbari
    May 14, 2017 - 9:49AM

    Alarming! So now Chinese investment in Pakistan will be more than 100 billion dollars. What is Pakistan offering in return ? Already we do not know the terms of repayment and other fine details of CPEC.
    .Recommend

  • Sameer
    May 14, 2017 - 12:32PM

    Wow. China investing in our waters. True friend. But why is China this nice to us. The only thing Pakistan has done in return is initial recognition of Chinese republic and that too a long time ago. Maybe thay gesture stuck with them.Recommend

  • kashig
    May 14, 2017 - 12:56PM

    goodRecommend

  • Saeed Masood
    May 14, 2017 - 2:12PM

    China did not involve in negative politics and did not not waste their money, now they have plenty of recourse…long live Pakistan China friendship..Recommend

  • Zeeshan qureshi
    May 15, 2017 - 3:28PM

    The good thing about these loans are that all of them are soft loans. Which means that repayments will come out of profits from each project. Hence Pakistan will not be out of pocket. Good deal I would say. Great work. Recommend

  • Asif
    May 15, 2017 - 9:58PM

    @Zeeshan qureshi: What soft loans are you talking about? Soft loans by definition are loans which do indeed requires small payment but it accrues interest. By the type it is paid of Pakistan will be paying perhaps $150 to $200 Billion dollars for $50 Billion original loan.Recommend

  • Pakistani Too
    May 16, 2017 - 4:18PM

    @Sameer: One thing is for sure, China does not do anything without serious planning & calculations and I have a good feeling Pakistan’s economy is set to rise in couple of years, with good governance, total of 5 billion income preset for sending the oil to china with the laid pipeline, road tolls surely will generate good income, with the help of 15 newly built power plants and new Chinese factories will create massive employment for common Pakistani.

    If Pakistan economy does exhilarate and we suddenly have 100 billion in our cash reserves, then the whole world will be running to join in to be a part of CPEC & OBOR, “Guaranteed”.Recommend

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