The last PML-N government kept the CPEC agreement wrapped in absolute secrecy and mystery and all along tried to evade the queries and concerns about the Nitti Gritty of this project by shallow verbosity and rhetoric. This remained a matter of great concern among all stake holders and people of the country. Now a strong demand has been made from the business leaders that Islamabad should renegotiated some of the terms of the agreement under CEPEC as the new government appears very keen to tackle the economic challenges and pressures to reap benefit of the project.
CPEC is of China’s Belt and Road Initiative (BRI) for getting an all-weather short rout fir its trillion of dollars of foreign trade. The CPEC component of BRI includes infrastructure and energy projects and development of Gawadar port in Baluchistan. While the previous government eulogized and oversold it as game changer, onlookers and stakeholders feel that details of the agreement remain opaque, raising serious questions on the extent of benefit to Pakistan and its throwback of extremely heavy debt burden on the economy.
With country’s economic managers now facing a headache over balance of payment position and depleting foreign exchange reserves the business community feel this would be right time to revisit some of finer details of CEPEC of CPEC agreements as Pakistan Tehrik-i-Insaf prepares to form the next government and navigate the way forward. “There is a need to renegotiate the returns to Chimes power producers,” Ehsan Malik Chief Executive of Pakistan Business Council emphasised, adding the question that needs to be asked if the new government can sustain this high guarantee returns. Under the framework agreement Pakistan has set up a revolving fund and is required to deposit 22 percent of revenue generated by CPEC energy projects to protect Chinese companies from the interoperate circular debt.
On the issue of investment and loans extended by Beijing and Chinese banks, Malik said Pakistan needs to make realistic projections and complete a comprehensive record of financial flows in a centralized manner to understand its debt burden and address its sustainability concerns. There has been no projection and very little transparency in the matter.
Arif Habib Chairman, of Pakisani conglomerate Arif Habib Group, feels that the process of financial close of some projects remained slow. Karachi Lahore Main line Railway track expansion project has been abnormally delayed because of the big cost differential between the one worked out by China and Pakistan Railway. Mitiari-Lhore high voltage transmission line project have hit snags besides the snail construction pace of roads on the western route of CPEC. They delay caused by the irrational terms and conditions by Chinese is adding to escalation cost and inefficiency.
The terms of agreement signed for Gawadar port are heavily loaded in favour of China and against the interest of Pakistan. Media reports had revealed that 91 percent of revenue to be generated in Gawadar port would go China with Pakistan bagging the remaining peanuts of 9 percent. It is pertinent to mention that the volatile Chinese Yuan has made sole legal tender for international, excluding all world currencies and Pakistani rupee as well. Gawadar free trade zone will be largely benefiting China at the expense financial gains of Pakistan. Former verbose and lies spewing Planning Minister Ahsan Iqbal that higher transit fee imposed on Chinese trade would make Gawadar uncompetitive. He said that instead of increasing transit fee turnover of trade should be increased to make the port an attractive destination.
The business community has argued for moving labour intensive export based Chinese industries to the special economic zones instead of capital intensive industries, which will wipe out the labour intensive industries of Pakistan because they operate on second generation technologies, less skilled working force and lack of innovations.
PTI is well positioned to make its case for renegotiating the terms of shady agreements by the PML-N government. It is a better organized party with a leadership of impeccable integrity, sagacity and is imbibed with a true spirit of patriotism for holding the national interest supreme. Its well informed and astute leadership and the fact that PTI will enjoy a strong hold in two of the four provinces and easy sailing in the third will augur well for its negotiations on revising the terms of agreement of CPEC to the maximum benefit of the country.