The federal cabinet in its meeting scheduled for September 17, among other items on the agenda, would also consider pros and cons of establishing CPEC Authority to fast-track implementation of projects which have been included in its framework of this flagship initiative of China and Pakistan. Earlier, the parliamentary committee on CPEC in a meeting two days ago had rejected the formation of supervising authority as it would be mere overlapping of subjects and multiplicity of unnecessary efforts in addition to its financial burden. But the government justifies its formation on account of entry of a third country Saudi Arabia in financing projects under the umbrella of CPEC. Saudi Arabia is setting up Oil City worth billions of dollars near Gawdar deep seaport.
There is a perception that the process of execution of CPEC related projects has lost its steam. It is gaining currency because of delay in the approval of PC-1 of first phase main railway line ML-1 project worth $2.4 billion by the Planning Commission. The commission has missed the deadline of 15th September set by the Prime Minister. Likewise the approval of revised PC-1 of Eastbay Expressway and Gawadar Airport projects are hanging in the balance. The agreement for the execution of Kohal hydel power project has also been delayed.
The planning commission has met the target of working out debt sustainability report of about 1800 kilometer ML-1project costing $6.2 billion. There is no denying the fact that the terms of agreements and mode of financing which were finalised by the previous government for CPEC related projects had transparency issues in terms of exorbitant cost, modus operendi of award of contracts by allowing bidding among the Chinese Companies alone and the rate of interest to be charged on the loans that would be sanctioned for the mega projects. The multilateral donor agencies including the International Monetary Fund (IMF) and the Asian Development Bank (ADP) had also objected to huge cost of ML-1 and expressed reservations as to whether the cash strapped economy of Pakistan could afford the payment of loans that would be acquired for the project. It is pertinent to mention that the World Bank had advised the previous government to refrain from increasing the public debt to the unsustainable level. The cost and transparency issues of this project need to be resolved with China.
The worries of donor agencies about the un-sustainability of public debt seem genuine. The debt bulletin report of the State Bank released two days ago shows that central government’s debt has shot up to Rs.33.02 trillion., showing further addition of Rs.1.23 trillion in a period of less than one year.
The most important component of CPEC is the establishment of special economic zones in four provinces, Azad Jammu and Kashmir, Gilgit Baltistan and tribal districts of Khyber Pukhtunkhwa. These industrial zones are vital for the next phase of industriaisation based on the induction of latest technologies and product innovations. However, the SEZs are either at the stage of land acquisition or their feasibility reports are yet to be finalised. It merits mention here that an agreement had been signed between Khyber Pukhtunkhwa Economic Zones Development and Management Company and China Roads and Bridge Corporation in November, 2018 for the development of Rashakai Rashaki SEZ in Nowshera district. However, it is not clear as to whether Power and Petroleum Divisions have evaluated the PC-1for the provision of utility services like electricity and gas. The Rashakai SEZ would need 200 megawatt uninterrupted supply of electricity. The process of execution of CPEC mega projects need streamlining.