Pakistan can’t afford turning CPEC into another KBD (Part II of II)

The following article has been published in Daily Nation, dated 25th May 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-05-25/page-9)

(Onlinehttp://nation.com.pk/business/25-May-2015/pakistan-can-t-afford-turning-cpec-into-another-kbd-part-ii)

Pakistan can’t afford turning CPEC into another KBD (Part II)

By: Omer Zaheer Meer

Link to Part I (Published): https://omerzaheermeer.wordpress.com/2015/05/18/pakistan-cant-afford-turning-cpec-into-another-kalabagh-dam-part-i-or-ii/

PART II

CPEC is strategically very important for China as it imports 60% of its oil from the Gulf of which 80% is transported by ships travelling over 16,000 kilometers in approximately three months on average through Strait of Malacca to Eastern China. This existing route is not only longer but is ridden with regular attacks by pirates, bad weather and political rivals under American and Indian influence. So the strategic benefits to China can be categorized in four major areas:

  1. China is heavily dependent upon the oil from Gulf for its energy needs. China will reduce the transportation distance from 16,000 km to just 5,000 km resulting in huge economic savings and quicker business all around the year sans the threat of blockade by political rivals.
  2. China will gain access to the untapped markets of the energy rich Central Asian states and Afghanistan which are termed as the next big thing and “Gulf replacement” for coming century. With this early access, developed secure routes and trade ties China can not only secure its energy needs for the next century but place itself as the world leader re energy security by having taps on the future energy sources, a place currently held by the USA.
  3. China will be able to spread its economic development benefits to its lesser developed western areas including the troubled Muslim-majority region of Xinjiang. Furthermore with enhanced security co-operation with Pakistan and economic developmental gains, China hopes to curb its troubles in its underbelly.
  4. Last but not the least, CPEC will not only provide China with an opening to the world from its western side but also ensure that by having a potential naval presence at Gwadar, not only does it hold an additional sea-port but has the capability to blockade the oil supplies to any future adversaries. Any attempts to encircle China such as those currently pursued by USA would become futile in such a scenario.

The benefits to Pakistan are numerous too. Some of the major ones are as below:

  • Uplift and development of badly needed transportation, technical and energy infrastructure.
  • Economic development through industrial and commercial zones setup along the CPEC.
  • Potential to earn billions of $ in transit fees, cargo handling and transportation charges.
  • Becoming economic connectivity hub for the entire region and beyond.
  • Security benefits of Gwadar port as outlined above.
  • With enhanced security ties with China and the economic developmental benefits, Pakistan also expects of stemming out the terror in lesser developed areas of Balochistan and KPK.

Considering all the significant benefits and strategic potential of the CPEC it was unfortunate that it became controversial. The controversy is two pronged. There are those who genuinely felt that the economic benefits of the CPEC were moved away from their provinces to Punjab, being the political constituency of the incumbent Government. However, there are also efforts led by India to disrupt the CPEC as is evident by the recently created desk at RAW with initial allocation of $ 3 billion for this purpose. Furthermore by signing accord to develop Chahbahar port with Iran, India has aligned Iranian interests with itself too. Moreover UAE’s interests also clash with Pakistan’s as the success of CPEC will render Dubai port an invalid. Furthermore, the strategic great game means that USA would rather not have it to see CPEC successful.

None of the external efforts would have been and can be successful without some genuine internal dissent though. Unfortunately the lack of transparency and undue secrecy around the CPEC allowed the propaganda as well as the genuine concerns to grow. Moreover the eastern route was the most talked about during the Chinese President’s visit to Pakistan, further raising concerns of depriving smaller provinces of their due. Absence of KPK, Sindh and Balochistan CM’s while CM Punjab was in attendance didn’t help the situation either. Therefore, KPK Assembly passed a resolution demanding the original route to be retained while Balochistan Assembly’s resolution demanded clarification on CPEC benefits to provinces from the federation. ANP then convened an “all parties’ conference” pressing the controversy and concerns forward.

Though late but some positive steps were taken. A meeting of the leaders of all parliamentary parties was convened to enlighten them on CPEC but the “Safora Goth” tragedy overshadowed the effort. However, the meeting didn’t address concerns with regard to greater transparency as little is revealed regarding the technical and financial parameters of the CPEC projects. The funding sources were also clouded in mystery but it now seems that most of the “investment” is in the form of soft loans with Chinese firms to execute several projects. Federal Minister for Planning and Development Mr. Ahsan Iqbal has claimed that all routes of CPEC are being worked at simultaneously and the western route will be the first one operational. Similarly he has claimed that Sindh and Baluchistan will be the biggest beneficiaries of power generation under CPEC with 36% and 26% shares respectively.

The government should use media to educate masses about the above claims as well as share why the alternate routes were developed. Was it to ensure connectivity across the country with developed areas, out of Chinese concerns for safety of passage in case of trouble on the route via Balochistan (as mentioned by some Chinese scholars in their write-ups in international media), to cater for the huge trade volume expected or some other reasons? Also more transparency such as clarifying that why the current PSDP contains allocations under CPEC only for the eastern route and not the others will help dispel the concerns and negative propaganda. CPEC is a game changer for Pakistan and the Government has the responsibility to ensure its successful completion. Pakistan cannot bear the potential loss and the dire consequences of CPEC turning into another “Kalabagh Dam”.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

Pakistan can’t afford turning CPEC into another Kalabagh Dam (Part I of II)

The following article has been published in Daily Nation, dated 18th May 2015

(E-Paper (Print Edition)http://nation.com.pk/E-Paper/lahore/2015-05-18/page-9)

(Onlinehttp://nation.com.pk/business/18-May-2015/pakistan-can-t-afford-turning-cpec-into-another-kalabagh-dam)

China Pak Economic Corridor: way forward (Part I of II)

By: Omer Zaheer Meer

PART I

The biggest gift of nature to Pakistan besides all kinds of terrains and weather as well as hardworking young manpower is its strategic location. In this context the strategic significance of Gwadar adds to this dimension of Pakistan’s international importance. Gwadar is a strategically located area on the shores of the Arabian Sea just outside the Strait of Hormuz. It is situated near key shipping routes of global oil transportation with the surrounding areas having two-thirds of global oil reserves. Furthermore it is the closest warm-water port to landlocked Central Asian region and Afghanistan, both rich in untapped natural resources and economically undeveloped with huge potential. As if that was not enough, from a military standpoint, Gwadar is located at the eastern bay of the key passing which if blocked by a strong naval force, can cut off the oil supplies to any adversary with dire repercussions as any military expert will testify.

Before moving ahead on the core matter of China Pakistan Economic Corridor (CEC), let us briefly visit the history of Gwadar. Pakistan identified Gwadar as a site for its future port in 1954 when it was still under the rule of Oman. Government of Pakistan successfully negotiated with the Sultanate of Oman and purchased the enclave in the fall of 1958, ending a 200 year Omani rule of the small undeveloped fishing town. It wasn’t until 1977 that Gwadar was made a part of Balochistan by the Federal Government of Pakistan. Currently it has a population of approximately 85,000 people as per most studies.

Now moving onto CPEC, it is a mega project worth $ 45.6 billion, to connect Gwadar port with Northwestern China (Xinjiang) via Khunjrab (the last connecting point on the Pakistani side) along with development and uplift of transportation, energy and technical infrastructure in Pakistan. A network of road and rail links besides energy pipelines are envisaged.

There are three land routes planned to link Gwadar to Xinjiang in addition to a long-term “route adjustment link”. The three main routes are outlined below:

  1. The “original”, shortest and most popularized route passes through Quetta, Zhob, D.I.Khan and Peshawar. It is termed as the “western route” and is just over 2400 km long.
  2. The second route passes through Ratodero, Sukkuar and the Indus Highway.
  3. The third route which has stirred up the controversy actually passes through Sukkur and Karachi in Sindh and then via Lahore and Peshawar to connect with Khunjrab. This is termed as the “eastern route”.

All the routes are envisioned to be interconnected with industrial and commercial zones along the routes at key sites.

CPEC updatedFurthermore other major projects that are part of the CPEC are as below:

  •  320-kilometre-long Sukkur-Multan motorway
  • 120-kilometre-long Thakot to Hawalian road
  • upgradation of Karakoram Highway
  • 19-kilometre-long Gwadar port East Bay Expressway Project
  • development of Gwadar itself
  • building Gwadar airport
  • upgradation of Karachi – Peshawar “Main (Railway) Line”
  • commission of armed division (Economic Corridor Support Force) for security of CPEC
  • Havelian Dry Port
  • Orange Line Metro (Lahore)
  • Port Qasim 2x660MW Coal-fired Power Plant
  • 720MW Karot Hydropower Project
  • Zonergy 9×100 MW solar project (Quaid e Azam Solar Park) in Punjab
  • Jhimpir wind Power project
  • Thar Block II 2x330MW Coal Fired Power project
  • Hubco Coal-fired Power Plant Project
  • Gwadar-Nawabshah LNG Terminal and Pipeline Project
  • China-Pakistan joint cotton bio-tech laboratory
  • Cross-border fibre optic data communication system project, a digital terrestrial multimedia broadcast pilot project at Murree
  • Development of Private Hydro Power Projects, e.t.c.

As can be seen from the above non-exhaustive list, a lot of the projects are related to developing energy and technical infrastructure in Pakistan in addition to the transportation infrastructure projects. Infact more than 70% of the $ 45.6 billion is expected to be spent on these projects. However it is the transportation infrastructure that caught most attention due to its long term strategic significance, revenue generation and potential to be the game changer for the region.

to be continued next Monday  ……

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, CFA Charterholder, experienced fellow Chartered Certified Accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

KBD – as big for Pak’s economy as Atomic weapons for defense

The following article has been published in Daily Nation, dated 16th February 2015

(E-Paper (Print Edition): http://nation.com.pk/E-Paper/lahore/2015-02-16/page-9 )

(Online: http://nation.com.pk/business/16-Feb-2015/kbd-essential-for-economy-as-nukes-for-defence )

KBD essential for economy as nukes for defence

Prof Dp

Pakistan is an agricultural country and needless to say that agriculture is the backbone of its economy. Water management is therefore an integral and extremely important aspect of growing Pakistan’s economy just like for any agricultural economy. However, Pakistan’s water management leaves much to be desired with regular cyclical flooding causing extensive losses to economy along with disrupting millions of lives regularly.

Improper and inadequate water management has not only resulted in shortfall of water in Pakistan but also the tragic wastage of precious water resources which instead wreak havoc in the form of floods every fear years, ending up being wasted without proper water-storage facilities. This is more ironic in the light of the severe energy crisis the country faces and the un-utilized cheap electricity generation option available from most dams.

Think-tanks in developed nations highlight and resolve such issues of national significance. It is therefore extremely important that these issues are deliberated upon, discussed and solutions proposed. Hameed Nizami Press Institute under Mr. Absar Abdul Ali took up the mettle to address this highly neglected issue recently and shared extensive knowledge about the topic as well as proposing valuable corrective measures.

Before sharing some of the key proposals of the experts’ in the conference mentioned above, it is worth mentioning here that just last year alone (in 2014) forty five thousands (45,000) houses and fifteen thousands (15,000) animals were destroyed as well as the losses due to the crops destroyed or damaged in over 300,000 acres of cultivated land, totaling to Rs. 240 billion as per the experts in the said conference. 22 major floods since independence have ravaged Pakistan regularly causing significant economic losses and contributing towards our national dependence on foreign debt and aid. However despite the availability of scientific progressions, practical measures and naturally adequate water-reservoir sites, unfortunately we have been acting as the disobedient son of Prophet Noah (PBUH) and keep on destroying ourselves despite the availability of “ship” which can take us to safety.

The constant floods faced by Pakistan since it gained independence resulted in losses of trillions of rupees due to the destruction of crops, properties, infrastructures, industries, cattle and most importantly human lives. Mr. Fazal Ahmad shared that the former East Pakistan and now Bangladesh used to face worse flooding as compared to the region that is now Pakistan. However their leaders prepared extensive plans to address the situation and implemented it with assistance from international donors. As a result Bangladesh has now materially reduced the problems it faced from flooding, thereby strengthening its economy and improving the quality of lives of its citizens. The question is that if Bangladesh can do it, what is stopping Pakistan from doing the same and reaping the consequential economic benefits?

In this context, former Chairman IRSA Mr. Shafqat Mehmood elaborated that the climate changes are expected to result in erratic behavior of monsoon along-with glacier melting which will cause increase in river flow. To address this potential exacerbation, work is required on both structural and non-structural measures for flood-prevention and protection. Pakistan must increase the storage capacity to mitigate the effect of floods and instead utilize the precious water resources instead of them being wasted. The measures proposed to turnaround the disaster of flooding into a valuable resource includes building dams and water reservoirs, catchment management, high flow diversions, water channel improvements along-with proper regulations, educating the masses, developing reliable flood forecasting and early warning systems, disaster preparedness, flood insurance and post-flood recovery plans.

While smaller dams and reservoirs are being built, there is a general consensus amongst experts that the highly politicized but hugely beneficial “Kalabagh” Dam (KBD) can not only bring significant economic benefits and energy generation capabilities to energy-starved Pakistan but also materially reduce the destruction of floods coming from that path. Former SVP Lahore Chamber of Commerce & Industry and Chairman of its Kalabagh Dam committee Mr. Abdul Basit highlighted this issue.

Unfortunately KBD has been largely politicized in Sindh and KPK. While KPK’s objections can be resolved with proper education that Nowsheha will not be flooded but rather saved from flooding due to KBD as many experts including former heads of WAPDS shared along-with offering financial incentives to soften the anti-KBD sentiments. In Sindh the issue is more of a lack of trust as to the fair distribution of water and recently raised issue of damage to the environment. Both can be addressed by measures including giving governing position of the KBD to Sindh with representation of all provinces in a specially formed body to oversee the administration and running of this mega-project which can change the economic and energy fortunes of Pakistan. Some structural changes and mitigation measures can also be agreed to reduce the damage to the environment.

Having said that, the political will be necessary to accomplish the feat is essential. We must recall that never in the known history of nations has there been an absolute consensus on any such project involving human relocation. Even in Pakistan, Mangla and Tarbela Dams were strongly opposed at first but once the Governments decided in their favor, the state implemented its writ. The affected were compensated and today the whole country is reaping the benefits. Imagine if the Governments at that time had given-in to the political pressures instead of making a decision to stand by the national interests where would Pakistan be standing today without both these mega-dams considering the already crippled energy generation systems and meager water storage facilities.

Those who cite political dogma of parties basing their politics on anti-KBD agendas needs to be reminded that despite divided opinion when the decision making circles made a decision, operation against terrorism ensued successfully. Why, then this operation against economic destruction which is equally important for the survival and growth of Pakistan, cannot be undertaken? It can and should be undertaken for the sake of Pakistan. All measures should be used to address the genuine concerns of all stakeholders but any dissent against national interests of Pakistan based on irrationalism and petty self-interests needs to be tackled as such. KBD can be as big for Pakistan’s economy and energy resources as Atomic weapons were to Pakistan’s defense.

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading economist, chartered financial analyst, qualified fellow accountant and anti-money laundering expert with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk