EDITORIAL: It is unfortunate that the government has failed to convince the Chinese to restarted work on a 300MW coal-fired power project in Gwadar because without it its energy requirements will not be met and the once sleepy fishing village will not be able to take its trumpeted, and marketed, place as the jewel in the crown of CPEC (China Pakistan Economic Corridor).
It turns out that M/s Sinosure, a Chinese loan management company is unwilling to cover governmental breach risk under medium and long-term buyer credit insurance because of delayed payments to CPEC IPPs (Independent Power Producers) as well as the long delay in the opening of a revolving account. That caused enough problems for the 31 January 2022 Financial Closing (FC) deadline to be missed and now it’s anybody’s guess if the Required Commercial Operations Date (RCOD), which is 30 June 2023, will be met.
The Private Power and Infrastructure Board (PPIB), which is sourcing the imported coal project by CIHC Pak Power Company Limited (CPPCL), tried to hammer out a solution in a meeting with sponsors in October 2021, to no avail, but once the matter was put to the government all it effectively did, at the end of the day, was request the Chinese to resume work on the project regardless of their concerns, also to no avail.
All this means that the project is still deadlocked, which leaves Gwadar in limbo and puts a serious roadblock in the way of the CPEC. It also risks getting the rhetoric about the CPEC being the game-changer that will finally transform the destiny of this region dismissed as mere eyewash. It’s already very disturbing that Baloch locals have started complaining about CPEC not getting the kind of attention in their province as it does elsewhere; and also that their own region is somewhat under-represented so far in the jobs that have sprung up because of it.
This isn’t the first time that Chinese companies have suspended work in Pakistan, of course, and the way this problem is being handled does not inspire confidence that it will be the last; or even that it will sort itself out anytime soon. If security problems weren’t bad enough, now there’s financial obligations to meet as well. And the fact that the government of Pakistan has left a little to be desired on both fronts, in what is after all a game-changing opportunity not just for Balochistan but the whole country, raises some very serious questions.
The government can claim that the security breakdown caught it off guard, although such explanations do not really wash in international relations of such importance. Surely, the CPEC Authority would have been aware that this was cooking for quite a while. Why, then, did it not do whatever needed to be done to make it go away? You can be sure that everybody is scrambling to save the deal and restart work now, but why did they have to wait till it was too late?
It’s time to confront the fact that the pace and quality of work on CPEC, particularly in Balochistan, are no longer doing justice to the fancy claims about a better tomorrow that everybody’s been fed since the idea of the Corridor was first floated. It is also very important to accept that if the government does not pull its socks up right now, there’s a very real risk of this rarest of opportunities being doomed to the downward spiral. Even an administration drowned in the politics of no-confidence would appreciate the gravity of this situation enough to give it top priority. Hopefully, this will be the last unforced error as far as the CPEC is concerned.
Copyright Business Recorder, 2022
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