China is to invest $50 billion in energy and infrastructure projects in Pakistan till 2017 of which $35 billion investment is anticipated in energy sector. This was disclosed by the Minister for Planning, Development and Reforms, Ahsan Iqbal at a recent meeting of federal cabinet, presided over by Prime Minister Nawaz Sharif. In the anticipation of massive investment from China, the government has decided to assign army for the security of Chinese workers in Pakistan.
Official documents available with Business Recorder reveal that the prime minister stated that the infrastructure projects included Lahore-Karachi Motorway, the Karakorum Highway and expanding the capacity of Gawadar Port. In the transportation sector, the railway line from Peshawar to Karachi would be modernised and upgraded. In the energy sector, ten projects had been approved in Gadani (Balochistan) and six in Thar (Sindh).
The prime minister informed the cabinet that during the last eight months, Foreign Direct Investment (FDI) had doubled. China has agreed to invest $4.5 billion each year in Pakistan for the next seven years. This investment of $31.5 billion by one country is unprecedented in the history of Pakistan. According to the prime minister, share of Balochistan in the Chinese investment would be 38%. He pointed out that the size of Pakistan's PSDP was only Rs 425 billion which is quite small for a large population of 180 million. Unfortunately, even this amount is not properly utilised. The quality of projects in the country is poor and they suffer from inordinate delays and resultant cost escalation.
In the Neelum-Jhelum project, the cost has increased from Rs 87 billion to Rs 220 billion. In another case, the original cost of Rs 5 billion has escalated to Rs 35 billion and the project is still incomplete. He further stated that the Chinese investment will spur unprecedented growth in the country, for which we need to develop capability and capacity to absorb and manage it.
The prime minister argued that it is imperative for improved governance and economic development in the country that a special team of officers who possess the requisite capability, commitment and zeal are assigned important responsibilities. He instructed the minister for planning and development to accelerate work on governance reforms.
The prime minister asked minister for planning and development to provide further details of Pak-China Joint Co-ordination Committee visit to China. The minister for planning and development informed the cabinet that during the visit of the Prime Minister of Pakistan to China in July last year, an agreement was reached on the establishment of an "Economic Corridor". During the visit of the Vice Chairman, National Development and Reform Commission (NDRC) to Pakistan, three working groups were set up, one each for Transport, Energy and Infrastructure sectors. Initially, projects to the tune of US $15-20 billion were approved. However, he added that because of hard work during the last six months and confidence of the Chinese government on Pakistani leadership, the number of projects has increased.
"We have tried to identify those projects that can benefit the country in the short term. These Early Harvest Projects would now amount to $50 billion. These projects would be completed by 2017," Ahsan Iqbal added. The projects include coal, solar and wind based electricity generation units. An investment of $35 billion is anticipated in the energy sector. These projects would generate 23,000 MW whereas the total generation of electricity in the country till date is only 21,000 MW.
The Lahore-Karachi Motorway, expansion of the Gawadar Port and integrated development of infrastructure in the Gawadar area would bring in further investment of $11 billion. The Karachi-Peshawar railway track will be upgraded. The minister for planning and development also pointed out that the Chinese expected us to work at a fast pace and avoid unnecessary delays. He also emphasised the need for improving internal security as concern was expressed by the Chinese government on this account, especially with respect to the security of Chinese nationals working in Pakistan.
The cabinet observed that the security of Chinese nationals working in Pakistan was an immediate concern. It was suggested that till the capacity of civil law enforcement agencies is improved, the task of providing fool proof security to the Chinese nationals may be assigned to Pakistan Army. The prime minister agreed to the proposal of assigning the security of the Chinese workers to Pakistan Army.
The minister for finance stated that according to JETRO, Pakistan would soon become the second choicest place for Foreign Direct Investment in the world due to improved economic performance. This will be possible if consistency in policies is maintained. He added that Pakistan has also announced 3G auction, which is expected by March/April.
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