China Pakistan Economic Corridor (CPEC) is betraying the hope of providing uninterrupted and economical power supply to Pak households and industries. In view of this, social acceptance of these power projects under the CPEC is increasingly coming under pressure. Pakistan’s domestic industries have been unable to compete in the international markets due to chronic power shortage, disruptions and rising power prices. The supply of power continues to trouble industrial production due to load-shedding for up to 16 hours per day in some industrial zones.
Pak energy projects under CPEC are lagging behind their schedule and power generation & supply in the country fall short of what is required for growth and development. Many observers point out that if CPEC energy projects could be fast tracked, the benefits from uninterrupted power supply would more than offset the increased burden/loans caused by these projects on Pakistan’s current accounts. Energy projects make up the bulk of Chinese investments in Pakistan through public & private loans and equity vaguely delineated by the government. The CPEC was cited as a classic case of investment model that can never fail, but the facts on ground do not stand the test.
Islamabad’s energy woes had worsened significantly since 2018. The government had introduced a fuel subsidy that was draining the treasury, claiming that it did not want to pass on the burden of rising fuel prices and worsening exchange rates to the consumers. Following the subsidy, there were diesel shortages, which in turn meant that many power plants fuelled by diesel could not function. Many power projects which had become operational are not in fact operating at full capacity due to diesel shortages. Meanwhile, Islamabad had failed to clear dues worth Rs.300 billion to Chinese power plants that were operational and this led to the closure of Chinese plants producing 1980 MW of power.
Many of Pakistan’s problems have to do with structural and systemic issues in its own economy. Underlying issues in the power sector included transmission losses, thefts and long pending power sector reforms. These shortcomings made the power sector economically unviable. As the effects of Russia-Ukraine war
showed off their consequences, costs of producing electricity sky rocketed and in August 2022 energy bills in Pakistan were higher than they had been in years.
Further, there were apprehensions over the burden of CPEC projects on the exchequer. Critics had expressed concerns whether Pakistan’s external account could bear the costs of CPEC projects. One of CPEC’s most vociferous critics has been the International Monetary Fund (IMF). Reports by the IMF claimed that Pakistan needed to exercise extreme caution when taking on more burdens on its fiscal accounts.
The ground realities of Pak energy projects under the CPEC are different from what Islamabad had predicted. The Pak government believed that all of loans and repayment burdens on fiscal accounts would be offset by the benefits from these energy projects. It had repeatedly assured critics that if energy projects remained on track, they would solve Pakistan’s chronic power supply issues and generate enough foreign exchange revenues to meet the increased burden on the current account. But it does not appear to be happening.
Besides, CPEC projects are criticized for their regional bias as well. The general trend in the construction of transport and infrastructure projects under CPEC in Pakistan is that most of the roads/routes that have been completed either pass through the province of Punjab or facilitates Punjab more than other provinces. Punjab’s domination of federal resources over other provinces like Sindh, Baluchistan, Khyber Pakhtunkhwa (KPK), and Gilgit Baltistan (GB) and its political influence over the federal government have been a source of discontentment since its inception. Punjab has historically received the lion’s share of state resources, development funds, such as those set aside for hospitals, schools and infrastructure, etc.
Activists from the peripheral provinces allege that Punjab’s routes are being strengthened further by CPEC, whilst routes through their own provinces fail to materialize and this is adding insult to their injury. Underdeveloped areas in Baluchistan, Sindh and KPK that lay across this route would have received substantial benefits from being connected to an international highway. But peripheral areas remained undeveloped leading to skewed regional development.
Politicians and activists from these provinces claimed that Nawaz Sharif’s government had changed the original routes to benefit the province they came from. The result was that CPEC was largely viewed as a project that would benefit Punjab, and provinces were wary of it from the very beginning. The opposition of the CPEC grew louder but as rightly pointed out by scholars like Seigfried O Wolf, the people of deprived regions have more likelihood of getting suppressed. He had anticipated that “independent decision making by military forces (in Pakistan) will quash opposition to CPEC in smaller provinces”. The single-lane highway in GB has not been upgraded or widened, and overland trade has not significantly increased. GB is being adversely affected by CPEC due to environmental and human consequences, especially loss of traditional livelihood opportunities and displacement. Unfortunately the manner in which the complaints of locals are being dealt only exacerbates the problem.
It is increasingly worrying to provincial activists from Sindh, Baluchistan, KPK and GB that the Eastern route has so far gotten most of the attention and the funds. As a growing insurgency and separatist movement takes center stage in Baluchistan, KPK, officials blame the federal government for creating nonexistent security concerns in the minds of Chinese officials responsible for development.
All of these political and social issues mean that CPEC is not socially accepted in regions outside Punjab. Meanwhile, the government has not done much to reassure locals beyond claiming that the transport routes are being developed to generate economic activity along the corridors and that the eventual construction of dams, hospitals and other infrastructure will bring development to these sidelined regions. The crux of the matter is that political interference in economic decisions spoiled Islamabad developmental model. The CPEC is fast losing its appeal among people outside Punjab.
