EDITORIAL: How typical that the same officials that defended the progress of CPEC (China-Pakistan Economic Corridor) till the last days of the previous government are now telling the new one just how bad things have actually become on the ground.
It turns out that Chinese power plants have shut down approximately 2,000 megawatts of production capacity due to non-clearance of dues to their investors; and total receivables of 10 Chinese IPPs (Independent Power Producers) have shot up to Rs300 billion, out of which Rs270 billion is overdue.
It’s also been reported in sections of the press, and not yet denied by the government, that the three imported coal-fired power plants — Hubco, Sahiwal and Port Qasim — have also closed one of their two units due to unavailability of fuel. And when these matters were brought before the last finance minister, Shaukat Tarin, he could do little more than extend a partial payment of Rs50 billion.
Given the circumstances it makes sense for the government to proceed with abolishing the CPEC Authority because it’s clearly “a redundant organisation with a huge waste of resources which has thwarted speedy implementation of CPEC,” according to Planning Minister Ahsan Iqbal.
But PML-N would probably have axed it anyway because it was against a parallel setup even when the project took off. And the Authority remained largely dormant although the PTI (Pakistan Tehreek-e-Insaf) government invested a good two years in setting it up. It only very reluctantly enacted the CPEC Authority Act in May 2021 but even then it never filled the position of the chairman after Lt-Gen Asim Saleem Bajwa (retd) first made it controversial and then resigned from it.
There are also lingering issues about setting up a revolving account, which Pakistan was supposed to do but never came round to doing, and delays in certain projects arising from sudden change in taxation policies by the last government in clear violation of commitments made to Beijing.
Under pressure from the IMF (International Monetary Fund), most likely, the government simply withdrew sales tax exemptions on imports. Ahsan Iqbal had a lot more to say as well about how the PTI administration allegedly ran this rare game-changing opportunity into the ground; like making “zero progress on industrial zones being set up at Port Qasim, Islamabad, and Mirpur.”
While details about what exactly went wrong over the last few years are only beginning to trickle through, it’s been pretty clear for a while that Pakistan’s inability to make timely payments to Chinese investors and provide adequate safety to their workers is a big part of the problem.
With terrorist attacks on the rise and the financial squeeze getting worse by the day, it’s not immediately clear how long the new government is going to need to solve these issues. But it has already sounded the alarm, and also a very serious warning, because if this precious chance is also wasted then there’s no way that Pakistan is going to be able to bring its infrastructure up to speed with the 21st century.
The CPEC is truly a game-changing opportunity for Pakistan and the only reason it’s such an integral part of China’s much bigger BRI (Belt and Road Initiative) is our strategic geographic location that no other country can match; not some notions of higher-than-mountains and deeper-than-oceans friendship that we have with the Chinese.
Sadly, so far we’ve just wasted this opportunity to give the country’s social overhead capital a desperately needed facelift; and now even excited foreign investors are losing interest. SEZs (Special Economic Zones) for example, prompted investors to line up to be part of the project in 2017. But needless delays that forced them to miss the 2020 deadline to be up and running also disappointed a lot of investors and now the tide has almost completely turned.
Hopefully, the corrective measures will not end just with scrapping the CPEC Authority. It has to be not just about identifying mistakes and oversights, but also correcting them. Short of that, no amount of noise about who did what wrongly and why, is going to revive China’s interest or get the project back on its feet. Only dotting all the Is, crossing all the Ts, and blocking all the holes will work.
Copyright Business Recorder, 2022