By : Dheeraj Upadhyay
China Pakistan Economic Corridor (CPEC), the flagship project under China’s ambitious Belt and Road Initiative (BRI) is an infrastructure development project which connects China’s Xinjiang province with Gwadar port in Pakistan’s Balochistan province to the shores of the Arabian Sea. Originally valued at $47 billion in 2013, the value of CPEC projects is now worth $62 billion in 2021.
CPEC infrastructure projects spread into the length & breadth of the country but initially, it was designed by the Punjabi-dominated ruling elites of Pakistan to provide better infrastructure to Punjab.
However, CPEC is like a Pandora box for Pakistan. Firstly, CPEC traverses through Pakistan-occupied Kashmir (PoK) on which India has raised strong objection. Secondly, CPEC’s majority of infrastructure and port development is based in the turbulent province of Balochistan where security is a big threat. Thirdly, it was already marred with corruption and high handedness of the Pakistan Army.
In 2018, the World Bank had cautioned the participating countries in the BRI projects about the impending debt risks, stranded infrastructure, social risks, and corruption. All these risks propounded by the World Bank seem to be coming true for the CPEC,
Even opposition and Pak intellectuals too has raised concerns over the massive loans involved in it, citing Sri Lanka and Tajikistan’s heavy borrowing from China. In 2011, Tajikistan had to cede 1% of its territory to China in exchange for unpaid loans. While, Sri Lanka gave away 80% of its share of the Hambantota deep-sea port to China for the next 99 years, in exchange for USD 1.1 billion in debt relief.
Islamabad too are feeling the heat of debt and high interest and have requested for debt restructuring of $3 billion against the CPEC energy projects showing its inability in repayment, Special Assistant to the PM on Power and Petroleum Tabish Gohar told Pak newsportal The Express Tribune.
“The country is scheduled to make Rs 435 billion or nearly $3 billion principal repayments to 12 Chinese independent power producers in three years,” he added.
“The government will request China to consider restructuring of the $3 billion repayments for 10 to 12 years, which in return will reduce the tariff increase requirements for Pakistan by Rs1.50 per unit from Rs.5.65 to Rs.4.60″.
Power consumers are already facing the brunt of tariff hike due to high CPEC loans.The average tariff is projected to increase to Rs 20.25 per unit by the fiscal year 2023 from the current Rs15.4 per unit.
China has set up 12 power plants under the CPEC and the repayments of the Chinese debt are included in the electricity tariffs. The consumers would pay them in rupees. However, the government had obligated to return in dollars. China has only invested about 26 billions in CPEC projects while Pak has to repay annually more than 3 billion as recurring interest.
Apart from high interest and loans making it a Debt Trap. The biggest worry is Balochistan which is alienated since it’s forced accession in 1948 but it’s resources was exploited to enrich the rest of the country without any fair share to Baloch leaving the province impoverished.
The much touted Gwadar port has been reduced to an ‘island’, rendered inaccessible to the local population and guarded by two divisions of Army. While China want accesss to West Asia through Gwadar port but it is still unviable since Pakistan is still using Karachi port for trade.