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December 10, 2013

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Home » Business » Economy

Chinese firms power economic revival in Pakistan

Source: AFP | December 10, 2013, Tuesday | Print Edition

Pakistan’s launch of work on its largest nuclear power plant last week is the latest example of big-money Chinese infrastructure projects in the troubled nation.

Cash-strapped Pakistan, plagued by a homegrown Taliban insurgency, is battling to get its shaky economy back on track and solve a chronic energy crisis that cripples industry.

Chinese companies are working on more than 100 major projects in energy, roads and technology, according to Pakistani officials, with an estimated US$18 billion expected to be invested in the coming years.

“Some projects are being done by the government, then most of the projects are being done by the Chinese companies, by the provinces and also with the state enterprises and authorities,” said Ahsan Iqbal, Pakistan’s federal minister for planning and development.

“In the energy sector, Chinese engineers are building up to 15 power projects that include hydel (hydroelectric), thermal and nuclear plants.”

Pakistan faces an electricity shortfall of around 4,000 megawatts in the summer.

To combat the crisis, Pakistan has sought Chinese help in building power generation projects across the country.

Aside from the 2,200MW project near Karachi launched by Prime Minister Nawaz Sharif last week, Chinese companies built two of Pakistan’s three operational reactors.

Chinese engineers are also busy in the construction of a 969MW hydropower project in Kashmir. They have also committed to generate 6,000MW of electricity from coal and wind in southern Sindh Province.

Visiting in May during his first overseas trip after taking office, Chinese Premier Li Keqiang linked growth in his country’s west with that in Pakistan, saying the two sides wanted to create an “economic corridor” to boost development.

The concept involves improving road and rail networks to link China through Pakistan to the Arabian Sea and Iqbal said its benefits would extend to other neighboring countries.

Creating opportunities

“The biggest flagship project is going to be the economic corridor. I hope with its completion we will be able to create opportunities not just for China and Pakistan but for the entire region,” he said. “If the economic corridor is constructed, trade between China and India can also take place from this corridor. Similarly, trade between China and Central Asia and also between India and Central Asia can take place.”

In January, the Pakistani Cabinet approved the transfer of Gwadar port, strategically located in the country’s far southwest, to a Chinese state-owned company.

Once the road network is improved, Gwadar will slash thousands of kilometers off the distance oil and gas from Africa and the Middle East have to be transported to reach China.

The bloody six-year Taliban insurgency and threat of expat workers being kidnapped and beheaded by militants has made many foreign firms wary of investing in Pakistan.

Chinese engineers on construction sites are guarded at all times by armed policemen.

“Pakistani people are very friendly with Chinese. That is why I am here since last three years and I will spend some more years over here,” said Wang Yanjun, supervising a road-building project in Muzaffarabad, the main town in Pakistani Kashmir.

“They provide respect and support to Chinese, so cooperation between China and Pakistan is increasing. I think we will do much more development projects in future than now.”

Wang’s company, China Xinjiang Beixin, has already worked on projects in Pakistan ranging from roads to airports.

Pakistan and China currently have annual bilateral trade of around US$12 billion and are trying to take it to US$15 billion in the next three years, though Iqbal said that Sharif is dreaming of doubling even this volume.

For China, investing in Pakistan’s crumbling infrastructure is a chance to boost trade and also use its southwestern neighbor’s workforce as it seeks to keep prices down while satisfying growing domestic demand.

 

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