CPEC: debunking the naysayers

CPEC will not bring automatic prosperity for Pakistan

Dr Haroon Rasheed September 08, 2017
The writer is director of the CPEC Centre at the University of Management and Technology, Lahore and is former foreign expert at National Science Foundation of the People’s Republic of China

Recently, a WhatsApp message based on a write-up that created ambiguities about CPEC and its impacts on Pakistan went viral. Rather than a game changer, it claimed that it was game over for CPEC. It is hardly the first time that such ambiguities have been spread. We have seen similar tactics being employed for the completion of a hidden agenda. For a better understanding of the project, here are my counter-arguments to the concerns raised.

1) Ninety-one per cent of the income from Gwadar port will go to China and only 9% will come to Pakistan: Developing and running a port is not like building a house or running a shop, it needs a huge investment along with a number of liabilities. Hence, if from the net income Pakistan gets around 10% without having spent a single penny, it’s great indeed. A strategic resource would be developed with someone else’s money but will ultimately remain Pakistan’s. Development of Gwadar will result in great economic activities not only for Pakistan but also for this deprived area that lacks even the basic necessities. Do you think Pakistan would have been able to develop this port without any external help in the next three to four decades? If no then rest assured, it is the best possible proposition with minimum risk.

2) Chinese companies will get preferential treatment and tax exemptions, making it impossible for local companies to compete and open the market for commercial invasion: This statement itself is misleading as no long-term CPEC plans have been disclosed yet. Only the projects including power and infrastructure were given tax rebates and only because we are suffering from chronic power shortages. Does anyone remember when was the last power project installed in Pakistan before CPEC? There is another aspect of this tax rebate. It will result in reducing the cost of construction of these projects, which will result in lower tariffs on electricity.

3) Money for the road network comes from Pakistan and hence, we are paying for the roads which will be used by China to export their products: This statement has two major concerns. Firstly, the roads built under CPEC will remain Pakistan’s property through the National Highway Authority and will generate revenue from toll tax and other commercial activities that will take place across these roads. Let’s leave out the social impacts and other benefits for now. Secondly, Chinese companies will build these roads with money pouring in from China on a concessionary rate that is in Pakistan’s favour. Pakistani companies are free to use this infrastructure for their exports or other logistic needs.

4) We will have to repay the loans taken for the energy project: This is a completely false and misleading statement, as out of initial $46 billion $30 billion is for energy projects that will be installed on BOOT basis (Build-Operate-Own-Transfer). Respective Chinese companies of each and every power project will be responsible for financing and repayment issues. Pakistan will buy the electricity that will be supplied for both commercial and domestic use. No loan has been taken by the government for any energy or power project so far. On the other hand, Chinese companies investing in power projects will receive repayment for their investment and there is nothing wrong in that.

5) There is no guaranteed profit: Considering that the circular debt in Pakistan is huge, will you install a 1kw power generator for the government at your own expenses? The answer is no. In that case, if China is going to resolve one of Pakistan’s mega problems, so why does one want to ruin it by making false arguments?

6) India is buying solar electricity for four cents/kWh, while we will buy coal-based electricity for eight cents/kWh: First of all, one can’t compare coal prices with solar prices. Also consider the exchange rate of Pakistani and Indian currencies and then try to understand the energy mix of both the countries. India is already producing 59% coal-based electricity and before CPEC, share of coal in our energy mix is only 2%. Another problem is that solar-based electricity can only be used till noon and industries can’t stop functioning after that. Any country in the world shifting to renewable energy has already produced enough electricity through reliable sources such as coal that can bear the burden of a major demand.

7) Pakistan’s ‘East India Company’: When the East India Company invaded the Asian subcontinent its main motive was money. India’s GDP was more than 25% of the world’s GDP at that time and Britain’s was less than 5%. Now China’s GDP is the second best in the world and where do we stand in terms of GDP, nowhere. So why would they colonise Pakistan?

Lastly, CPEC will not bring automatic prosperity for Pakistan. God helps those who help themselves; if we want economic prosperity and development, we will have to devise our path ourselves. CPEC will provide an opportunity for everyone. I met an industrialist last month who wants to start a mega project next year for which he will need 5,000 qualified engineers. But this will only happen if we have the infrastructure and electricity for it. You can blame the government for many things but not CPEC for any. Our industrialists are well aware of the opportunities and I receive multiple queries every week from different businessmen regarding these opportunities and possibilities of increasing exports once the project is complete. Believing in Pakistan is the only way forward.

Published in The Express Tribune, September 8th, 2017.

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shahid | 3 years ago | Reply
India is buying solar electricity for four cents/kWh, while we will buy coal-based electricity for eight cents/kWh: First of all, one can’t compare coal prices with solar prices.
What an argument! Have you read about the coal powered plants that India has dumped in favor of renewable energy resources? Do you know how much solar based energy is being produced and being planned for these days in almost every developing country in he world? Have you heard of Germany, Scandinavian countries and Spain and what hey have been able to accomplish with renewable energies? Instead of quoting what was built in India when renewables option was not there why do you not read what they are doing now? This article is nothing but a shallow defence of something that is totally indefensible. Why are we not building and developing Gawadar ourselves? CPEC which could have been a bright paln for Pakistan's future has been converted to another source of loot and plunder for the "ashrafiya".
JILANI | 3 years ago | Reply "Another problem is that solar-based electricity can only be used till noon and industries can’t stop functioning after that." Did I read it correctly?
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