CPEC expansion plan hits roadblock

ISLAMABAD: The multi-billion dollar China-Pakistan Economic Corridor (CPEC) project has hit a roadblock after Beijing refused to further expand cooperation, underscoring the challenges that are needed to enhance and deepen economic ties.

Sources have confirmed that China has not agreed to expand cooperation with Pakistan in several areas including energy, water management and climate change under CPEC.

On the other hand, Pakistan has also lifted its opposition to the coal-fired power plant in Gwadar, along with many other demands concerning the Chinese, addressed during the 11th Joint Cooperation Committee (JCC) to the CPEC.

While the JCC meeting was held in October 2022, the consensus over the minutes took at least a year, leading to signing of the minutes on July 31, 2023.

“The delay was because China did not agree to a host of measures that Pakistan had proposed in the areas of energy, water management, climate change and tourism in Gilgit-Baltistan (GB), Khyber Pakhtunkhwa (KP), Pakistan occupied Kashmir (PoK) and the coastal areas,” stated economist Shahbaz Rana.

“The JCC is a strategic decision making body of CPEC and its 11th meeting was held virtually on October 27, 2022 on the insistence of the PML-N led government that wanted to showcase some progress."

While the rejection from China and forced compromise from Pakistan on various reservations is seen as a critical step backwards, the Islamabad government maintains that deliberations and differences on understandings is a normal practice.

“It was a global practice for the minutes of meetings between two countries to be signed by both the sides only after due consultation and evolving consensus. This is to ensure that the minutes accurately reflect the agreements and understandings reached by both the parties,” an official from the Ministry of Planning said.

“The 11th JCC meeting minutes were signed in July 2023 after a thorough consultation process. Both the sides reviewed and discussed the minutes in detail to ensure that they comprehend all these outstanding issues and future goals,” the official added.

China ensured that it lets go of the financial challenges being faced by power companies from the minutes, removing 701 megawatts (MW) Azad Pattan Hydropower project, 1,124MW Kohala power plant and 1,320MW Thar Block 1 Shanghai Electric Co power plant from the final minutes.

It has also been revealed that Pakistan has given major concessions to China for setting up the 300MW Gwadar Power Plant.

“Pakistan wanted to either shelve the 300MW project or change its locations to Thar to use local coal. But China did not agree to Pakistan’s text about the Gwadar plant, which had not mentioned that both sides recognized that there was a need to examine the requirement, size, location and fuel type for 300MW Gwadar Power Plant in view of escalating international coal prices, which were resulting in exceptionally high prices of electricity, liquidity and foreign exchange issues for Pakistan and environmental concerns,” said Shahbaz Rana.

China has also disagreed to the proposal of inclusion of 100MW KIU and 80MW Pander hydro power projects, implementation of which was to be done through Chinese investors.

The wide range of disagreement from China on CPEC expansion put a damper on many initiatives in Pakistan, which Islamabad hoped would be done through Chinese investments.