Pakistan and China are going to enter a new era of bilateral cooperation after the signing of multi-billion-dollar agreements for energy production and infrastructure development during Prime Minister Nawaz Sharif’s visit to China.
Earlier, such deals were expected to be inked during a trip of Chinese President Xi Jinping to Pakistan in October this year, but that was postponed in view of the protest marches and sit-ins in Islamabad by the Pakistan Tehreek-e-Insaf (PTI) and Pakistan Awami Tehreek (PAT).
Energy supply is a critical subject as people endure hours-long outages that sometimes extend to 18 to 20 hours in rural areas during summer. One of the major causes that led to the defeat of Pakistan Peoples Party (PPP) in the 2013 elections was the power and gas shortage. The current Pakistan Muslim League-Nawaz (PML-N) administration could meet the same fate if outages do not come to an end or are not brought under control.
According to Minister of Planning, Development and Reforms Ahsan Iqbal, the cumulative value of deals struck in Beijing will be $45 billion including $34 billion energy and $11 billion infrastructure projects.
This is a big commitment on the part of China and implementation of projects could prove to be a major boosting factor for the PML-N government. It is following this plan to win back public support that has waned during the nearly three-month-long sit-ins. Such promises were lacking in the previous PPP-led coalition government.
Before leaving, PM Sharif had pledged, “I am going to China to save my people from excessive load-shedding during atrocious summers.”
In a long-term programme to eliminate the yawning electricity deficit, the government is striving to set up a slew of power plants with a cumulative capacity of over 10,000 megawatts. At present, the demand-supply gap ranges between 3,000 and 7,000MW. Many of the projects will be based on coal, wind and solar energy.
In the short term, however, officials are hoping to ease the crisis by running power plants, especially those shut down because of natural gas shortage, on imported liquefied natural gas (LNG).
Better energy mix
At present, the cost of power generation is higher because of poor energy mix as power plants do not receive gas and most run on expensive furnace oil. With Chinese support, Pakistan will be able to improve the energy mix and cut production cost, leading to a reduction in consumer tariffs.
But this may not be enough to appease consumers who are paying the cost of power theft and inefficiency of distribution companies.
According to a latest report submitted in the cabinet, the collection of electricity bills dropped 10 percentage points in the year since the present government came to power and stood at 80% in 2013-14. Receivables of the companies rose Rs100 billion to Rs448 billion.
This shortfall in collections underlines the need for overhauling the distribution companies to bring efficiency and spare the consumers of the burden of power theft and company loans in future.
Gwadar in focus
China will also assist Pakistan in initiating road-building projects and linking the Gwadar Port with other areas of the country and even neighbouring countries. This will help prop up economic activities in Balochistan and provide employment opportunities to the local populace.
Establishing an LNG terminal and laying an LNG pipeline from the Gwadar Port to Nawabshah are also the schemes where Chinese cooperation is sought. It will help make the port an energy corridor and open the LNG market. It will also lead to the setting up of power plants at the port and industrial zones at its mouth.
After a row with the US and European Union over the Ukrainian conflict, Russia is also looking at China for its energy market as Beijing appears to be playing a leading role in the economic survival of different countries. Pakistan should also capitalise on the opportunity for reviving its faltering economy, which has been hurt by the war on terror and acute energy shortages.
As the host of the Asia Pacific Economic Cooperation (APEC) Economic Leaders’ Summit 2014, Beijing has identified strengthening connectivity as an important priority area for the meeting this year. The two-day meeting on November 10 and 11, which will be attended by PM Sharif, is likely to approve APEC’s blueprint on connectivity to promote policy coordination, inter-connected growth and inter-dependence for development in the Asia-Pacific region.
THE WRITER IS A STAFF CORRESPONDENT
Published in The Express Tribune, November 10th, 2014.
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