The News on Sunday: China’s investment in CPEC is reported to have reached nearly $60billion. Is there any break-up of this investment? How much of it is FDI, loans, and grants? How is Pakistan hoping to pay back?
Ahsan Iqbal: The original package of CPEC is around $46b. Out of this, $35b is allocated for energy projects in the domain of Independent Power Producers (IPP). There are no loans involved as such. While $11b is concessional financing loan for infrastructure development for roads, airport, railways etc. — that is approximately on two per cent markup payable over a period of 20-25 years and, in some cases, 25-30 years. This is the softest loan which any country can get from any source.
Partly, there are some grants. For instance, a grant for airport. But we see this $11b as overall package on softest payment conditions with a composite rate of approximately two per cent markup. Therefore, it has a minimal impact on Pakistan’s debt burden.
We have now expanded the portfolio. Many new projects have been added and the scope may go up to $55b.
TNS: Which CPEC-related projects are underway and how transparent are they?
AI: Much has been made of transparency issue. I assure you CPEC is going to be the most debated and scrutinised project in the history of Pakistan. There have been numerous presentations in the standing committees of National Assembly and Senate. There is a joint parliamentary committee that is supervising the CPEC projects and we share all details in our meetings.
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As for the $35b energy projects, which are in the IPP mode, the government exercises no control. These are approved by the power regulatory authority NEPRA, which has representatives from all the provinces. Besides, all tariff is put on the NEPRA website.
Again, the process for infrastructure projects is transparent. The government of Pakistan does not choose contractors; it is China which nominates a panel of credible Chinese companies which take part in the bidding process. Whoever has the lowest bid is awarded the projects.
A number of these energy and infrastructure projects are in the works. A fiber optics project, from Khunjrab to Islamabad, is also underway. It is expected to bring connectivity to northern areas. The Multan-Sukkur portion of CPEC is also under construction.
In Karachi, a 1320MW coal power project shall be completed by the end of this year. Sahiwal coal power plant has come through its first phase. The second unit will be inaugurated in the next two months. Two power plants in Thar are underway, and so is the Mitiari-to-Lahore transmission line.
Besides, several wind and solar energy projects are in the pipeline.
TNS: Concerns are being raised that a big chunk of the workforce required for various CPEC projects might come from China, and it would get a visa-free entry into Pakistan. Comment.
AI: This is baseless propaganda by elements that have vested interests. All the projects have majority of workers and engineers from Pakistan because it is not in the interest of China to transport its expensive workforce and station it here. To those who say China has sent its prisoners in the name of labour, my question is, could prisoners be so highly skilled?
All these projects have timelines, and there is penalty on contractors who delay work. So, you can’t afford unskilled labour. Secondly, this is a good opportunity for Pakistani workforce to educate themselves. More than half of the workforce on every project is Pakistani; at some places, it’s also up to two-third.
TNS: What is being done to provide training to the local manpower in Balochistan so that they can benefit from the projects?
AI: As for Balochistan, we are investing heavily in institutional development. Technical training institutes are being set up. One of these involves help from China. This year, we inaugurated the University of Gwadar because we also need managerial and human resource development. The engineering university in Khuzdar is also being upgraded. Similarly, another university has been opened near Qila Saifullah.
TNS: Apparently, all political parties are on the same page on CPEC. Or, why do we hear no dissenting note?
Al: Yes, there is no issue between the federation and provinces on CPEC. Also, we must understand that $85m jobs in China are up for grabs.
China’s per capita income in the 1980s was $200 and Pakistan’s was $300. Today, our per capita income is $1,500 and theirs is $8,000. Due to their per capita increase, wages in China have considerably increased and its industry is under pressure not to become competitive. Hence, these $85m jobs are being relocated because Pakistan has low-cost labour. We can duly benefit from this situation.
We are friendly nations, and strategic partners, and it is in the interest of both the countries to benefit from such opportunities and work together. This shall not harm our local businessman, manufacturer, and the people of Pakistan.
TNS: What is the agreement with China on Gwadar? Is it both a port and a military base? Will the local Baloch workforce benefit from the Port?
AI: Gwadar is purely a commercial port. It is tipped to become an important commercial hub because it has the advantage of being the best deep seaport in the region, as it is at the shortest distance from China. It is an open sea from where you can go to the Central Asia, Far East Asia, Europe, and Africa. Therefore, it is being developed as an economic and commercial opportunity.
The local Baloch shall get a maximum share in the workforce. They are going to be the primary beneficiaries of the port.
TNS: Is it true that China also plans to focus on Pakistan’s agriculture sector, under the CPEC?
AI: The document on CPEC master plan, which surfaced recently, is not the actual one. It showed as a long-term plan is actually an input or suggestions given by China Development Bank team. After reading that plan we prepared our own draft. And now we have a new document. The cabinet has approved it and sent it to China for the final nod. They have also approved it in principle. It will be signed on soon and then made public.
However, long-term plan is not a project document. It is a framework document. It identifies areas of cooperation and along with energy, infrastructure, industry it also includes agriculture on our request. We have included this agriculture sector because we want to upgrade our agriculture with the help of Chinese technology. They have researches in this area. Our seed and agriculture industry is more primitive. China, for example, has the most modern drip irrigation system in the world. Through this cooperation, our agriculture sector will become value-added. It will give local farmers more productivity and more yield and they will have a higher value.
TNS: To what extent is CPEC going to improve our trade and transport system through road connectivity?
AI: It is important to ensure stability and connectivity of these projects. Road connectivity is the core focus area in CPEC. Different routes have been finalised for better connectivity. For example, completion of Gwadar to Quetta Road has reduced travel time from eight to two days. It will bring revolution in the remotest areas. Two roads, Gilgit to Chitral and to Chakdarra will open North West areas. And Mirpur-Muzaffarabad-Mansehra route will open up many new avenues. Similarly, in Balochistan, Noshki to Panjgur will also open up new areas.
TNS: Many groups are expressing concerns over low priority given to Gilgit-Baltistan, the gateway to CPEC. Are there any development plans for GB?
AI: We are to open new road networks in GB. A new network of roads will be laid out.
The development budget of GB and Azad Jammu and Kashmir (AJK) has been increased from Rs10bn to 18bn and Rs12bn to 22bn respectively. This is a phenomenal increase. It includes energy projects, and medical and engineering schools.
Through CPEC, GB is getting fiber optics connectivity. We have also planned to build a software park in GB.