Gwadar to undergo the most significant change through CPEC

Gwadar – The major advantage of the China-Pakistan Economic Corridor (CPEC) is regional integration, since the project does not just serve Pakistan and China alone, but the entire region. The investment coming in under CPEC is larger than the cumulative foreign direct inflows since 1970, making it a game-changer for Pakistan.

A major part of CPEC is the development of Gwadar port, which is set to undergo the most significant changes amongst all the projects. Projects such as the Gwadar Free Zone are set to provide employment to more than 40,000 people. It was decided in the Joint Coordination Committee (JCC) meeting on CPEC, held in November 2017, that Gwadar would be given the foremost priority with special emphasis on its electricity issues.

The China Pakistan Economic Corridor (CPEC) is a sub-project of Xi Jinping’s multi-national One Belt, One Road initiative, which is in its implementation phase. The signing of $46 billion worth of CPEC related agreements between Pakistan and China on President Xi Jinping’s visit to Islamabad in April 2015 was considered a milestone in strengthening Sino-Pak relations.

CPEC will serve as a bridge between Pakistan and China in the development of closer relations with other regional countries as well as the world community. Thus, CPEC is not about China and Pakistan alone, but about connecting the region through economy and energy, ports and pipelines, roads and railways, with Pakistan as the hub of this emerging regionalism. The size of $46 Billion investment, if ensued, will be equal to cumulative gross foreign direct investment inflows into Pakistan since 1970.

CPEC is not meant to benefit only one province, party or government. It is for the uplift of all of Pakistan. The most significant change will be seen in Southern Balochistan, including Gwadar itself. CPEC projects include the infrastructure development and rehabilitation, power generation, port development and other areas of same nature.

The backbone of CPEC is the Gwadar Port, the only deep sea port in the area. The Gwadar Port was constructed in 2007 and the decision to make it a part of CPEC was made in 2015. The operation of the port was handed over to China Overseas Port Holding Company (COPHC) with the aim to construct new multipurpose berths, cargo terminals and other ancillary facilities.

An economic and industrial zone known as the Gwadar Special Economic Zone (SEZ), will also be developed in Gwadar which will be in line of Special Economic Zones of China. It is expected that this zone will provide employment opportunities to around 40,000 people of the area. This SEZ zone will be completed in three phases and by 2025, it is envisaged that manufacturing and processing industries will be developed, while further expansion of the zone is intended to be complete by 2030.

The backbone of CPEC is the Gwadar Port, the only deep sea port in the area. The Gwadar Port was constructed in 2007 and the decision to make it a part of CPEC was made in 2015. The operation of the port was handed over to China Overseas Port Holding Company with the aim to construct new multipurpose berths, cargo terminals and other ancillary facilities

For development of SEZ, the area has dire need of electricity. Currently the Gwadar electricity network is being fed limited electricity from Iran. There are several technical issues, due to which the Gwadar electricity network is separate from the National Grid. This electricity network is feeding Gwadar, Turbat and Punjgur district of Balochistan. Only 35MW are supplied, due to which 12 to 14 hours of load shedding is common in the area.

Joint Coordination Committee (JCC) meeting on CPEC was held on November 21, 2017 wherein, it was proposed to review the Gwadar plan in a timely manner and address the power shortage issue. In pursuant to JCC decision, a high level meeting was held on November 22, 2017 on development of a power project at Gwadar Balochistan keeping in view the demand and supply scenario within the next three to four years. The meeting was attended CCCC industrial Investment holding Company Limited (CIHC) representatives along with NESPAK, CPPA(G), NTDC, PPIB and Ministry of Energy.

The Gwadar Port Authority has presented its projected demand up to the completion of First Phase of Special Economic Zone as 290 to 300 MW. The demand includes installation of one steel mill, Potential demand on New Gwadar International Airport, estimated demand of Gwadar Port, potential demand of different industrial units and preliminary estimates of Gwadar City. Similarly, a demand forecast study conducted by Quetta Electric Supply Company (QESCO), showing potential increase of 299 MW up to 2020-2021 and 507MW up till 2024-25.

To deal with all the above scenarios, the stake holders decided to install a 300MW power plant in Gwadar and accordingly handed over this task of power generation to CIHC.  After due consideration for the selection of right fuel, CIHC has decided to construct an imported coal base power plant because of non-availability of LNG or natural gas in Gwadar. CIHC also considered using local Coal Fuel for power generation, but the idea was dropped because there simply aren’t enough coal mines in Pakistan.

Another consideration was renewable energy sources such as solar power or wind power, but due to base load requirements, renewable power plants are not suitable for the area. After all these consideration imported coal fired power plant was selected and implementation of project was started.

The cost of electricity generation is approx. Rs 9/kWh, whereas the cost of electricity from a Furnace oil (FO) based power plant is estimated to be around Rs 19/kWh (with FO price at Rs. 78,000/ton). The estimated time for completion of 300MW Coal fired power plant at Gwadar is thirty months from the date of Financial close of the project on fast track basis.

The 300MW Coal Fired Power Plant (CFPP) will have its own benefits which will be cultivated by the local area population as well as the whole country. CIHC is planning to train the local engineers and technicians who can manage the CFPP operation in future, by training them in Pakistan. The other indirect benefits are the availability of power to the SEZ of Gwadar which as mentioned earlier, provide job opportunities to the people of the area. This will not only uplift the socio economic activities of the area but also boost the economy of Pakistan.

The recent power outage in Gwadar showed the necessity of launching this 300MW power project. Moreover, the import of electricity from Iran is strategically unstable and unreliable, technically not suitable for Pakistan(due to mismatch of 60 & 50 Hz frequency). Its tariff is also far too high.

Keeping in view the above mentioned facts, we must realise that 300MW CFPP project will be a sign of a developed and stable Balochistan. As a nation, we should support such developmental projects in Pakistan and stand for the successful completion of CPEC.

"Monitoring Desk"

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