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LOGISTIC MANAGEMENT

Term Paper

NAME: MUHAMMAD WASEEM

STUDENT ID: F2019198015

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Table of Contents
1. China-Pakistan Economic Corridor (CPEC)...........................................................................................5
1.1. Introduction: -..............................................................................................................................5
1.2. Pakistan Objective from CPEC: -...................................................................................................5
2. CPEC: A Gateway to Prosperity: -.........................................................................................................6
2.1. Trade and Market Access: -.........................................................................................................6
2.2. Industrial Development and Global Value Chains: -.....................................................................6
2.3. Socio-economic Development and Poverty Alleviation: -............................................................7
2.4. Agriculture Modernization and Marketing: -...............................................................................7
2.5. Gwadar Oil City and Blue Economy: -..........................................................................................8
2.6. Regional Connectivity and Third-Party Participation: -................................................................9
3. CPEC Ground Connectivity: -................................................................................................................9
3.1. The Northern Passage: -..............................................................................................................9
3.2. The Eastern Route: -..................................................................................................................10
3.3. The Western and Central Routes...............................................................................................11
4. Projects Under CPEC: -.......................................................................................................................12
4.1. CPEC Energy Projects: -..............................................................................................................12
4.2. CPEC Infrastructure Projects: -...................................................................................................15
4.3. CPEC Gwadar Projects: -............................................................................................................16
4.4. CPEC Other Projects:..................................................................................................................18
4.5. CPEC Rail Based Mass Transit Projects: -...................................................................................19
4.6. CPEC New Provincial Projects: -.................................................................................................20
4.7. CPEC Proposed Special Economic Zones (SEZs): -......................................................................20
4.8. CPEC- Social Sector Development Projects: -.............................................................................21
5. CPEC Opportunities: -........................................................................................................................22
5.1. Agglomeration Economy: -........................................................................................................22
5.2. Optical Fiber Connectivity: -.......................................................................................................22
5.3. Housing Challenges in Pakistan: -..............................................................................................23
5.4. Marble Sector Potential: -..........................................................................................................24
5.5. E-Technology Through Optical Fiber: -.......................................................................................25
5.6. Exchange of Arts and Crafts:......................................................................................................25
5.7. China Pakistan Joint Development of Museums and Storytelling Theater: -.............................26
5.8. Salvaging the Organic scrumptious Fruits of Gilgit Baltistan: -...................................................26
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6. Financing and Financial sector Integration: -.....................................................................................26

6.1. Exports Promotion Through CPEC: -..........................................................................................26
6.2. Innovation Modes of Revenue Generation Through CPEC:.......................................................27
7. Policy Imperatives for CPEC...............................................................................................................27
7.1. Energy Policy: -..........................................................................................................................27
7.2. Industrial Policy: -......................................................................................................................27
7.3. Trade Policy: -............................................................................................................................28
7.4. Foreign Exchange Regime: -.......................................................................................................28
7.5. Financial Policy: -.......................................................................................................................28
7.6. Skill Development Policy: -.........................................................................................................29
8. HOW DOES CPEC BENEFIT PAKISTAN?...............................................................................................29
8.1. Benefits that CPEC Brings to Pakistan........................................................................................30
8.1.1. Quaid-e-Azam Solar Power Park Bahawalpur....................................................................30
8.1.2. $4.8 Billion is being spent by China....................................................................................30
8.1.3. Lahore Line Metro Train:...................................................................................................30
8.1.4. 2,000 km of rail and road networks connecting Kashgar, China to Gwadar, Pakistan:......30
8.1.5. 3000 locals were hired by Sahiwal coal fired power plant:................................................30
8.1.6. $35 Billion is being spent by China to construct 19 power plants:.....................................30
8.1.7. 30,000 direct job opportunities have been created in power and infrastructure sectors for
Pakistanis...........................................................................................................................................30
8.1.8. Karakoram Highway Phase 2:.............................................................................................31
8.1.9. Special economic zones where companies can enjoy business incentives and tax holidays
31
8.1.10. 2.5% projected annual growth for Pakistan via CPEC:.......................................................31
9. Conclusion: -......................................................................................................................................31
10. References: -..................................................................................................................................32
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1. China-Pakistan Economic Corridor (CPEC)

1.1. Introduction: -
China-Pakistan Economic Corridor is a framework of regional connectivity. CPEC will not only
benefit China and Pakistan but will have positive impact on Iran, Afghanistan, India, Central
Asian Republic, and the region. The enhancement of geographical linkages having improved
road, rail and air transportation system with frequent and free exchanges of growth and people to
people contact, enhancing understanding through academic, cultural and regional knowledge and
culture, activity of higher volume of flow of trade and businesses, producing and moving energy
to have more optimal businesses and enhancement of co-operation by win-win model will result
in well connected, integrated region of shared destiny, harmony and development.
China Pakistan Economic Corridor is journey towards economic regionalization in the globalized
world. It founded peace, development, and win-win model for all of them.
China Pakistan Economic Corridor is hope of better region of the future with peace, development
and growth of economy. [1]

1.2. Pakistan Objective from CPEC: -

 Attract aid and foreign direct investment to boost economic growth, create jobs, enhance
productivity, and increase exports.
 Obtain financing for electricity generation and transmission projects to eliminate
shortfall, meet future residential and industrial demand, and achieve a more affordable
and diverse energy fuel mix.
 Upgrade road and rail infrastructure to enhance regional connectivity and ground
logistics efficiency.
 Reduce dependence on the Karachi port and Port Qasim, lowering port congestion and
making a potential full Indian naval blockade less likely.
 Leverage Chinese investment and expertise in industrial zones to bolster and diversify
manufacturing sector through industrial zones producing higher value-added goods.
 Modernize and diversify agricultural industry through Chinese investment and transfer of
technology.
 Expand the Sino-Pak relationship beyond a strategic and military alliance into an
economic partnership as well.
 Use CPEC as a demonstration effect, indicating to other investors that Pakistan is a safe
and attractive destination for foreign direct investment.
 Establish Pakistani ports as transshipment hubs for Central and South Asia and western
China.
 Develop the economically backward region of Balochistan.
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2. CPEC: A Gateway to Prosperity: -

It is an irrefutable reality that the relations between China and Pakistan are historic and time-
tested, and the continuation of the projects under the China Pakistan Economic Corridor (CPEC),
as part of the Belt and Road Initiative (BRI), is a testament to an all-weather friendship. Our
bilateral ties remain strong and backed by the principles of cooperation and incentives for the
administrations and citizens of both countries. Hence, the intention behind writing this article is
to bring awareness to the masses on those areas of CPEC which the government has signified for
its extension. Since the CPEC has now entered into the next phase of development to cultivate
the socio-economic dividends of the country. Therefore, a thoughtful effort has been made under
the chairmanship of the Minister for Planning, Development and Reform to make CPEC a
“Gateway to Prosperity”. Accordingly, in the next phase of development six major “Doors of
prosperity” would be focused which are: Trade & Market Access; Industrial Development &
Global Value Chains; Socioeconomic Development & Poverty Alleviation; Agriculture
Modernization & Marketing; Gwadar Oil City & Blue Economy and; Regional Connectivity &
Third-Party Participation. The rest of the study will look upon these six doors of prosperity with
a critical insight and recommendations.

2.1. Trade and Market Access: -

The variety of projects in the areas of trade and market access under CPEC will originate a
plethora of opportunities in different spheres of life. In this connection, collaborative bond with
China will be the rich source of promoting trade, facilitating market access, elevating the
standard of living and achieving sustainable inclusive growth in Pakistan. In addition, through
CPEC, Pakistan will be able to open its doors to the world by expanding its trade and transport
links, as well as boosting economic influence across Central Asia, South Asia, Middle East,
Africa and Europe. In the past few years, the major chunk of the trade deficit of Pakistan
developed from trade with China. Therefore, Special Economic Zones (SEZs)/Export Processing
Zones (EPZs) under CPEC need to be developed keeping in view the objectives of fast-track
industrial growth and export promotion through diversified products. Furthermore, while
developing SEZs/EPZs, due consideration may also be given to the fact that the exports could be
boosted by ensuring value addition in existing exports through manufacturing processes. China is
the second largest economy in the world and is the leading exporter of the world with $2.2
trillion and the second largest importer worth $1.8 trillion. Pakistan is currently exporting goods
and services worth $1.5 billion to China which could be enhanced manifolds through cooperation
between both the countries and an increased market access to the Chinese markets. In this regard,
the China Pakistan Joint Chamber of Commerce and Industry could be instrumental.

2.2. Industrial Development and Global Value Chains: -

Under the fold of Industrial development and global value chains, the center has proposed
industrial cooperation and import substitution with China in various sections including food
packaging and processing, agriculture, technology, iron and steel, marble and granite, textile and
petrochemicals and light engineering sector supported by industrial relocation and investment of
the Chinese industries and other investors (locals and diaspora). The process is expected to
increase export and create import substitution. Repositioning expansion of the IT sector through
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joint ventures along with the transfer of technology and capacity building will certainly drive up
productivity graph. In a nutshell, under the industrial development and global value chains
category, the next phase of CPEC will focus on the development, population and operations of
CPEC’s SEZs/EPZs. To better populate and then run the SEZs/EPZs, right investment strategies
in addition to right industrial mix in the zones will be ensured. Furthermore, process-specific
incentives in each sector will be offered to improve the overall competitiveness of the industrial
sectors. Finally, backward and forward linkages through urbanization, better management and
incentives framework will be encouraged to expedite industrialization in the country.

2.3. Socio-economic Development and Poverty Alleviation: -

The socio-economic development and poverty alleviation are on the top of the agenda of the
CPEC projects in the next phase of development. Pakistan highly acknowledges the importance
of social sector development for the prosperity of the country. In this regard, a Joint Working
Group is established under CPEC for socio-economic development and poverty alleviation,
addressing issues such as housing, relocation of labor-intensive industries, skill training, off-grid
solar household solutions, job creation, clean drinking water, education, healthcare, forestry,
technology transfer etc. It will further consolidate the bilateral relationship between the two
countries under CPEC and enhance cooperation in socio-economic development and poverty
alleviation in less developed areas of Pakistan (given below), as well as establish a mechanism of
knowledge sharing and experience exchange through friendly cooperation between both the
countries. During the next five years, CPEC will focus on improving the basic public services for
people of Pakistan, all-round cooperation through different CPEC projects would show a
preference for local residents in employment, and the exchange and cooperation in different
areas concerning people's livelihood would lead to the socio-economic development and poverty
alleviation in Pakistan.

2.4. Agriculture Modernization and Marketing: -

Agriculture is one of the key labor-intensive sectors of the economy. More than half of the
population particularly the rural population depending upon the agriculture for livelihood thus
contributing towards poverty alleviation. The sector contributes 19% to GDP and expected to
double by 2030. Over the last years, a noticeable growth of 3.81% has been witnessed that
surpassed the targeted growth of 3.55%. It shares 20% in total exports and target is set to
increase its share in total exports by 2.5% in the next five years. The sector absorbs 43% of
labour force and providing livelihood to 64% of the rural population. Livestock is the dominant
sector as it contributes 59% in agriculture and shares 11.11% to GDP, whereas, crops, forestry
and fishing performed well and witnessed a significant growth of 3.81%, 7.17% and 1.63%
respectively. Availability of water resources, technologies, research and development, skills and
access to national and international markets are the key determinants of its success. China and
Pakistan, during the next phase, will give full play to their own comparative advantages to
strengthen agricultural activities within the CPEC portfolio and would play their active roles in
agricultural exchanges and cooperation to promote the systematic, large-scale, standardized and
intensified the development of the agricultural sector.
Some of the recommendations in this regard include:
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 Sharing of Remote Sensing Technologies for Land Fragmentation, Land Consolidation

and Land Zoning
 Joint research on Conventional and Genetically modified seed varieties
 Collaborative Development of Agro-Ecological Zones
 Jointly establish laboratories for testing, monitoring and management of crops,
horticulture, livestock, aquaculture and poultry
 Encourage the Mutual Recognition Agreement (MRA) to boost trade
 Jointly establish Vocational Training Institutions to uplift Agriculture Sector Productivity
 Mutual Development of a Platform to conduct Trade dialogues on Agriculture Sector
 Co-Branding the Agro products and boosting the multi-lateral trade
 Establishment of Agriculture Machinery Production and Demonstration zones in the BRI
countries
In addition, both China and Pakistan would promote the transition from traditional agriculture to
modern agriculture in the areas along the CPEC to effectively boost the development of the local
agricultural economy.

2.5. Gwadar Oil City and Blue Economy: -

Under the CPEC portfolio, Gwadar holds the key importance. The strategic focus on
simultaneous development of Gwadar port and city — in the form of a new smart port city
master plan — is primarily due to the natural and symbiotic relationship that exists between a
port and the city that surrounds it; one cannot be developed without the other. Gwadar’s planning
is underway in order to lay the foundation for a sustainable regional and blue economy, drive
local businesses, and increase port throughout. Gwadar has the potential to attract domestic and
foreign investments in the region and develop it in an integrated regional manufacturing and
energy hub/oil city. The strategies for Blue Economy in the context of Gwadar will be adopted
during the next five years to promote activities in coastal areas of Gwadar. Efforts would be
made for sustainable fisheries initiatives and to harness ocean and coastal-related resources like
building fish stocks, enhancing fishing capacities, and implementing the controlled harvest
mechanisms. Innovative methodologies would be used for expansion in eco-friendly services in
Gwadar and at other coastal areas of Pakistan. The next phase of development under CPEC will
address the potentials and key issues related to the energy potential, blue economy and to
maximize the gains. In addition, during the next phase, the blue economy concepts would be
governed by processes that are based on: mutual trust and respect, inclusiveness, allows
equitable sharing of mutual benefits, marked by stakeholder participation; scientifically sound
information; accountable and transparent; holistic and cross-sectoral; and innovative and
proactive.[2] Active cooperation and partnerships would be ensured within and amongst public
and private sectors to steer the concept of blue economy in Gwadar with special recognition of
the needs of the local people, and in line with existing international, regional and national
commitments. One-third of the petroleum imports of Pakistan are in the form of refined oil,
which is substituted with the crude oil could save around $3-3.5 billion a year for which a couple
of oil refineries would be required to be established in Gwadar.
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2.6. Regional Connectivity and Third-Party Participation: -

During the next phase, the focus will also be on CPEC infrastructure towards connectivity
improvement, analysis of the alternative optimal routes for the entire region through Gwadar
port, and exploring the feasible connections among Central Asia, Middle East, Africa and
Europe. Importance of regional connectivity through the construction of rail/road infrastructure
together with energy projects are well understood. Moreover, the optimum benefits from the
CPEC projects could be attained by ensuring the third-party participation in these projects,
particularly of those countries/parties who could possibly be potential beneficiaries of the BRI.
Such an initiative will not only increase the acceptability of the CPEC as an integral part of BRI
but would also hinder possible attempts of cracks in future. The probable modes of third-country
involvement may include, (i) consortium countries, (ii) firms, (iii) international financial
institutions, and (iv) international development banks participating in specialized funds
generated for infrastructure development and development of Special SEZs/ EPZs.

3. CPEC Ground Connectivity: -

The CPEC enhances road and rail connectivity between Kashgar and Gwadar Within Pakistan,
no single Chinese-built road runs from the border with China to the Arabia Sea and Gwadar. The
intra-Pakistan CPEC road network has evolved into three routes—the western, central, and
eastern—none of which are entirely new. Upgrades along these routes are being financed not just
by Beijing, but also by other multilateral lenders and domestic borrowing. The government of
Pakistan is also using its own funds for some projects. CPEC largely expands or improves
existing road networks in Pakistan, builds off recently completed infrastructure projects, and
leverages ongoing projects funded by the government of Pakistan or other international lenders,
such as the Asian Development Bank (ADB) and the US Agency for International Development
(USAID). The largest road expenditure in the CPEC portfolio is a single section along the
Karachi- Lahore Motorway, and will primarily benefit the Karachi port and exporters in the
industrial hubs of Punjab

3.1. The Northern Passage: -

The Karakoram Highway is the main artery connecting Islamabad and Rawalpindi with Kashgar.
Completed in 1979 and prone to landslides, it has fallen into disrepair. Within Pakistan, major
bottlenecks interrupt the portion between Islamabad and the city of Gilgit. Along this stretch,
large portions are not controlled-access highway but instead resemble a high-speed boulevard.
Before CPEC was launched, Beijing and Islamabad initiated an upgrade of the highway from the
Khunjerab border with China to Raikot in the Gilgit-Baltistan region. A series of tunnels along
this 208-mile route also allow for the flow of ground traffic through areas sub¬merged by water
as a result of landslides that occurred in 2010. The road upgrade and tunnels were completed in
late 2015. Until then, vehicles and freight had to be transported by raft over the Attabad Lake,
itself a result of the landslides. [3]
Under CPEC, the highway is being upgraded from Raikot to Thakot in Khyber Pakh¬tunkhwa
province using a combination of a grant and a concessional loan from Beijing totaling $150
million. Future work may need to be done along this 168-mile stretch. Pakistan’s Na¬tional
Highway Authority explains that “major portion[s]…shall be submerged into the dam lake
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reservoirs,” necessitating a realignment of the route. A realignment is under way from Thakot to
Havelian in Khyber Pakhtunkhwa using a $1.3 billion concessional loan. The work, which
involves the construction of seven tunnels and sixty-eight large bridges, will be completed in
2020. [4]
These projects will connect to the Hazara Motorway from Havelian to Burhan in Punjab, the
construction of which is funded by the ADB and Britain’s Department for International
Development. The Hazara Motorway is slated for completion by the end of 2017.
CPEC is a single route from Khunjerab north to Burhan. At Burhan, the Hazara Motorway will
intersect the existing six-lane Peshawar-Islamabad M1, which feeds into the existing Islamabad-
Lahore M2. According to Pakistan’s National Highway Authority, the Hazara route will cut
travel time from Mansehra in Khyber Pakhtunkhwa to Islamabad from four hours to two.
Together, these projects are taking care of critical upgrades to connectivity between the
Khunjerab border with China and Pakistan’s high-speed motorway network, significantly
reducing travel time, cutting logistics costs, and eliminating crippling bottlenecks. In good
weather conditions, the trip from the Khunjerab border pass to Islamabad will be reduced from
multiple days to one day, possibly as few as eleven to twelve hours.16 Transporters are likely to
make pit stops along this route at the Sost Dry Port, about fifty miles from the border with China,
where a customs facility is located, and at the dry port planned four hundred miles farther down
the Karakoram Highway in Havelian, Khyber Pakhtunkhwa, which is about forty miles from the
Peshawar-Islamabad Motorway. Havelian is also home to the railway station closest to China

3.2. The Eastern Route: -

The CPEC eastern route begins in the Islamabad-Rawalpindi metropolitan area and connects to
both Karachi and Gwadar via major urban centers in Punjab. The existing M2 begins near the
Islamabad and Rawalpindi sister cities and connects to industrial and population centers in
Punjab. Its terminus is in Lahore. Along the way to Lahore, a leg splits off and becomes the M3,
which ends at the textile hub of Faisalabad. From Faisalabad, the M4—currently under
construction and scheduled for completion in 2018—will link to Multan, the largest city in
southern Punjab. Before Multan, a leg of the Karachi-Lahore Motorway merges into the M3. The
remainder of the network heads to Karachi.
The Faisalabad-Multan M4 is funded primarily by the ADB, but some sections have received
assistance from the Asian Infrastructure Investment Bank, the Islamic Development Bank, and
the British government. None is funded through CPEC, but collectively they are part of a
highspeed road network planned by the government of Pakistan to link the country’s major
cities.
The most critical infrastructure development along the eastern route will be the Karachi- Lahore
Motorway, which will provide quicker travel between Pakistan’s two largest cities, reducing
travel time between them from between sixteen and eighteen hours to between ten and twelve
hours. Like most Pakistani road network projects, the construction of the Karachi- Lahore
Motorway is divided into multiple segments each with different contractors and funders. Only
one segment is financed under CPEC. The Lahore to Abdul Hakeem section, a non-CPEC
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project, will be built by China Railway and is expected to be completed in 2018. It merges onto
the last leg of the Faisalabad-Multan Motorway (funded by the Islamic Development Bank).
Ninety percent of the next section, from Multan to Sukkur, is funded by CPEC concessional
loans totaling $2.85 billion. It will be completed in late 2018 or early 2019. The next stretch,
from Sukkur to Hyderabad, is a non-CPEC project, the contract for which has yet to be tendered,
though the project is expected to be completed by 2020.19 The final leg of the Karachi-Lahore
route—upgrading the four-lane Hyderabad-Karachi superhighway into a six-lane motorway—is
funded by a consortium of Pakistani banks. It is scheduled for completion in 2018. [5]
The Karachi-Lahore Motorway connects to Karachi and Port Qasim, two established Indian
Ocean deep-sea ports. From Karachi, Gwadar is a seven-hour drive along the existing Makran
Coastal Highway—the construction of which was funded by China in the early2000s. This, from
Burhan to Karachi to Gwadar, is CPEC’s eastern route.

3.3. The Western and Central Routes

From Burhan, trucks also have the option of using CPEC’s western and central routes. By 2018,
a new four-lane motorway (expandable to six lanes) will carry the western and central routes
from Burhan to Dera Ismail Khan in Khyber Pakhtunkhwa via Mianwali in western Punjab,
cutting travel time from the present six to eight hours to around three and a half. The 177-mile,
$1.36 billion project was expected to be added to CPEC but does not appear to have been
included in the portfolio even though construction is under way.
This motorway will circumvent many of the main industrial and ethnic Pashtun population
centers in Khyber Pakhtunkhwa province. The northwestern city of Peshawar is treated as part of
the eastern route because it is already connected to Islamabad via the M1—a mere two hours
from Islamabad and five-and-a-half from Lahore. The CPEC includes no allocations to upgrade
the north-south Indus Highway (or N-55) from Peshawar to Dera Ismail Khan, which is presently
in abysmal condition. Under a $300 million program using its own funds, the Pakistani
government is upgrading the N-55 from Kohat (south of Peshawar) to Dera Ismail Khan.
Rehabilitating a longer stretch—from Peshawar to Dera Ghazi Khan—would both help
industries in Khyber Pakhtunkhwa and poor agrarian regions of southern Punjab, and provide the
shortest and fastest route from Peshawar to both Gwadar and Karachi. [6]
The western and central routes split in Dera Ismail Khan. The western then travels through
mountainous western Balochistan, including Quetta, to Gwadar. The central moves east through
southern Punjab and interior Sindh to connect by an east-west motorway to the western and
eastern routes to Gwadar.
Now that the N-85 highway connecting Gwadar to Quetta is completed, the western route is
operational. It is also, however, lengthy and inefficient. Sections are being rehabilitated with
funding from CPEC and other international partners. The convoy of Chinese trucks that arrived
in Gwadar for the first container shipment in mid-November 2016 used the N-85, taking the
common CPEC route from Khunjerab in Gilgit-Baltistan to Burhan and exiting on to the N-80
highway toward Kohat in Khyber Pakhtunkhwa. From Kohat, it moved along the N-55 highway
toward Dera Ismail Khan, then shifted onto the N-50 highway toward Zhob and Quetta in
12

Balochistan. The N-50 will be rehabilitated with loans from both the ADB and China (via
CPEC). In Quetta, the convoy then took the N-25 highway (whose upgrade was funded by
USAID) through Kalat into Surab—passing by a short east-west highway funded by China under
CPEC connecting Khuzdar and Basima. It then used the N-85 highway to travel through Panjgur
to Hoshab, and then, finally, reached Gwadar via Turbat using the M8 and the Beijing-funded
Makran Coastal Highway.
The Planning Commission identifies the central route as part of the CPEC long-term plan. The
official map indicates that a new high-speed motorway is planned, connecting Dera Ismail Khan
to Shahdadkot in northern Sindh, running roughly parallel to the existing, dilapidated N-55
highway. China is currently providing more assistance to high-speed road network development
linking to the Karachi port than going to the Gwadar port directly. CPEC road projects dovetail
with those supported by other international agencies. Through the Central Asia Regional
Economic Cooperation program, the ADB aims to strengthen connectivity between Pakistan,
Afghanistan, and the former Central Asian Republics. USAID is also supporting road network
projects linking Pakistan and Afghanistan. These agencies and lenders have slightly different
visions of regional connectivity, but they complement CPEC. CPEC and CPEC-supporting
projects will not only make Gwadar a more trade-viable option for China, but will also improve
the attractiveness of the Karachi port and Port Qasim— two world-class deep-sea ports that have
been operational for decades. At the Karachi port, a new container terminal—presently deeper
than the Gwadar port—operated by Hutchison Port Holdings has opened. They make Karachi an
optimal transshipment hub for western China and northwestern India, especially the state of
Punjab, should inefficiencies in customs clearance and local ground connectivity and
bureaucratic processing be overcome.

4. Projects Under CPEC: -

4.1. CPEC Energy Projects: -
Project Name
2×660MW Coal-fired Power Plants at
Port Qasim Karachi
Suki Kinari Hydropower Station,
Naran, Khyber Pakhtunkhwa
Progress Update
1. Financial Closed (FC) achieved
2. Civil works on site started in May 2015
3. Jetty completed
4. Plant 2 months ahead of schedule
5. Energization in October 2017
6. Ist Unit Inaugurated in November 2017
7. Second Unit Commercial Operation
Date (COD) 25th April 2018
8. Project completed 67 days ahead of
schedule
9. Current Status: Operational
 Financial Close achieved on 31st
December 2016
 Land acquisition award announced on
17th November 2016.
 Construction work under way.
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Sahiwal 2x660MW Coal-fired
Power Plant, Punjab
Engro Thar Block II 2×330MW Coal fired
Power Plant
TEL 1×330MW Mine Mouth
Lignite Fired Power Project at Thar
Block-II, Sindh, Pakistan
ThalNova 1×330MW Mine Mouth Lignite
Fired Power Project at Thar Block-II,
Sindh, Pakistan
Surface mine in block II of Thar Coal field,
3.8 million tons/year
Hydro China Dawood 50MW Wind
Farm (Gharo, Thatta)
300MW Imported Coal Based Power
Project at Gwadar, Pakistan
Quaid-e-Azam 1000MW Solar Park
(Bahawalpur) Quaid-e-Azam
UEP 100MW Wind Farm (Jhimpir, Thatta)
Sachal 50MW Wind Farm (Jhimpir,
Thatta)
 Expected Commercial Operation Date
(COD) December 2022
 Financial Closed (FC) achieved on
December 2015
 Project Completed in 28th October 2017
 Project has been connected to National
grid Current Status: Operational
 Financial Closed (FC) achieved in
April, 2016.
 Construction work in progress.
 Construction of Transmission line-
contract awarded. Contractor mobilized
 Thar coal plant begins pumping power
into national grid in March 2019
Commercial Operation Date (COD)
June, 2019
 Financial close attained in April 2016
 IA/EA signed
 Mining work in progress ric tons per
annum (MTPA)
 Thar Block II Unearths Coal on 10th
June 2018
 Commercial Operation Date (COD)
expected, 2019
 Financial Closed (FC) achieved on
March 27, 2015.
 Commercial Operation Date (COD
attained 5th April 2017.
 Current Status: Operational
 PPIB issued LOI
 Site finalized by CCCC
 Under tariff award.
 COD of 3 x 100 MW attained in August
2016.
 Financial Closed (FC) achieved on
March 30, 2015.
 Commercial Operation Date (COD)
attained 16th June 2017.
 Current Status: Operational.
 Financial Closed (FC) achieved on
December 18, 2015.
 Commercial Operation Date (COD)
attained 11 April 2017.
 Project Completed
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SSRL Thar Coal Block-I 6.8 mtpa &
SEC Mine Mouth Power Plant
(2×660MW)
Karot Hydropower Station
Three Gorges Second Wind Power Project
CPHGC 1,320MW Coal-fired Power
Plant, Hub,Balochistan
Matiari to Lahore ±660kV HVDC
Transmission Line Project
 Current Status: Operational.
 Financial Close of Plant and Mine
second quarter of 2017.
 Mine Commercial production is
expected by 2019.
 Plant Expected Commercial Operation
Date (COD) 2018/2019.
 Land acquisition award done.
Enviromental NOC issued: 14th July
2015
 EPC Stage Tariff: 28th April 2016
Financial Close achieved on 22nd
February 2017
 Construction of access road/bridge,
concrete batching plant, diversion tunnel
and spillway, etc. are in process.
 Work initiated through equity – 50%
civil works completed.
 Expected Commercial Operation Date
(COD) December 2021.
 LOS issued in August 2016.
 EPA initialed on 30th November, 2016.
 Financial Close March 2017. COD:
Three Gorges Second Wind
 Farm (TGTWF): 30th June, 2018
 COD: Three Gorges Third Wind
Farm (TGTWF): 9th July, 2018
 Current Status: Operational
 IA/ Power Purchase Agreement Signed
on 25th January 2017
 LOS issued on 12th April 2016; 1 st
extension to LOS issued on 24th January
2017
 Ground breaking ceremony held on 21
March 2017
 Expected Commercial Operation Date
(COD) 660 MW Feb 2019, 660 MW
Aug 2019
 Feasibility study completed
 Tariff determined by NEPRA
 TSA/IA initialed in December 2016
 Land acquisition for converter stations
at Lahore and Matiari completed
 Agreement signed between PPIB and
State Grid of China on May 2018
15
Matiari (Port Qasim)-Faisalabad
Transmission Line Project
Thar Mine Mouth Oracle Power Plant
(1320MW) & surface mine
Kohala Hydel Project, AJK (1100 MW)
Rahimyar khan imported fuel Power Plant
1320 MW
Cacho 50MW Wind Power Project (Sindh)
Western Energy (Pvt.) Ltd. 50MW Wind
Power Project
Phandar Hydropower Station
Gilgit KIU Hydropower
4.2. CPEC Infrastructure Projects: -
Project Name
KKH Phase II (Thakot -Havelian Section)
120 KM
Peshawar-Karachi Motorway
(Multan-Sukkur Section)
 Financial Closed (FC) achieved on 27th
February 2019
 Expected COD in March 2021
 Feasibility study completed
 Decision on tariff review petition
announced by NEPRA
 COD expected in 2018 / 2019
 TSA/IA initialed during 6th JCC China
Electric Power Equipment and
 Technology Company (CET) / State
Grid nominated by Chinese side
 Feasibility stage tariff obtained for coal.
 Shareholding agreement on new equity
partners in process. Under issuance of
NTP/LOI.
 Feasibility Study (stage-1) Tariff
Announced by NEPRA
 Land Acquisition process started
 Environmental NOC issued by AJ&K
EPA
 Financial close planned in Dec 2018
 Expected Commercial Operation Date
(COD) 2025
 Project is listed as actively promoted
project
 LOI by GoP issued
 LoI Stage
 LoI Stage
 Under review of experts from both
sides.
 Under review of experts from both
sides.
Progress Update
 Work commenced in September, 2016.
 Contractor mobilized.
 To be completed by March 2020.
 Construction works commenced in
August 2016
 Contractor mobilized
 Multan-Shujabad section inaugurated by
Prime Minister on May 2018
16
Khuzdar-Basima Road N-30 (110 km)
Upgradation of D.I.Khan (Yarik) - Zhob,
N-50 Phase-I (210 km)
KKH Thakot-Raikot N35 Remaining
Portion (136 Km)
Expansion and reconstruction of
existing Line ML-1
Havelian Dry port
(450 M. Twenty-Foot Equivalent Units)
Capacity Development of
Pakistan Railways
4.3. CPEC Gwadar Projects: -
Project Name
 Completion planned in August 2019
 Feasibility and PC-I completed
 PC-I has been approved by ECNEC on
12-04-2017
 Procurement of Civil Work is under
process
 The project Basima Khuzdar has been
taken up through PSDP
 PC-I Approved by ECNEC on 12 th
April, 2017.
 Land acquisition in Progress.
 Accorded highest priority in 8th JCC
 Feasibility and PC-I completed
 PC-I has been approved by ECNEC on
18-03-2017
 LOI forwarded to Chinese side
Procedural formalities to be completed
shortly
 Feasibility completed
 ML-1 Project declared ‘Strategic’ by 6th
JCC in Beijing
 Framework Agreement on ML-1 signed
on 15th May 2017 during PM Visit to
China
 Commercial Contract for Preliminary
Design signed on 15th May 2017
 Project will be completed in 2 phases
 PC-1 of Phase-1 approved by CDWP in
May 2018
 Expected COD 2022
 Feasibility completed
 Project to be put on fast track
 Framework agreement signed in May
2017
 Focus groups be established for
effective training and capacity
enhancement.
Progress Update
17
Gwadar East-Bay Expressway
New Gwadar International Airport
Construction of Breakwaters
Dredging of berthing areas & channels
Development of Free Zone
Necessary Facilities of Fresh Water
Treatment, Water Supply and Distribution
Pak China Friendship Hospital
 Cost approved by ECNEC on 12-01-
2015
 Contract Agreement was signed b/w
GPA & CCCC on 24-09-2017
 Groundbreaking ceremony of Eastbay
Expressway was held on 22nd
November 2017 by Prime Minister
 Construction works underway
 Date of Completion October 2020
 Design and work plan agreed
 Grant Agreement signed in May 2017
 Groundbreaking done by Prime Minister
on 29th March 2019
 Draft business plan has been received
from Chinese (COPHCL), under review
by MoP&S and GPA
 Draft business plan has been received
from Chinese (COPHCL), under review
by MoP&S and GPA
 Draft MoU for joint Technical and
Commercial Feasibility has also been
Prepared and being vetted by concerned
Ministries
 Tax exemptions for port and Free Zone
notified in Finance Bill 2016
 Ground breaking done by the Prime
Minister 100% private Investment inside
Free Zone. To be operated by COPHCL
 1st phase completed and inaugurated in
January 2018
 Significant progress and response from
investors
 Gwadar Free Zone investment guide
line published
 First Gwadar Expo was held in January
2018
 A number of industries to start
construction work in soon
 PC-I for 5 MGD RO plant for Gwadar
cleared by CDWP
 Phase-1, lying of pipelines from Swad
Dam to Gwadar is near completion.
 Desalination plant establishment on
BOT is floated
 Grant request sent by EAD to
18
Pak-China Technical and Vocational
Institute at Gwadar
Gwadar Smart Port City Master Plan
Bao Steel Park, petrochemicals,
stainless steel and other industries
in Gwadar
Development of Gwadar University
(Social Sector Development)
Gwadar livelihood Project
MOFCOM
 Feasibility study completed by Chinese
team to add 100 beds from existing 50,
for subsequent extension to 300 beds
LOE is signed on 10th April 2018
between EAD adn MOFCOM
Implementation minutes signed on 29th
 March 2019
 GPA acquired 18 acres land and
infrastructure of old Gwadar Degree
College for establishment of Pak-China
Technical & Vocational Institute
 The onsite feasibility study of the
project has been carried out in January
2017 by the China International
Engineering Company
 Minutes of onsite feasibility study has
been signed with Chinese side on 09th
August 2017
 LOE between EAD and MOFCOM
signed in April 2018
 Implementation minutes signed on 29th
March 2019
 MoU signed in Nov 2015
 LOE signed in August 2015
 Chinese Fourth Harbour Design Institute
has been nominated for Gwadar Smart
City Plan
 Contract Signed in May 2017
 Completion planned in 2019
 Necessary approval process would be
completed at the earliest for inclusion as
new CPEC Project under Gwadar JWG
 Chinese side will identify a leading
Chinese university for collaboration
with University of Gwadar on marine &
maritime related subjects along with
other disciplines
 Upgradation and development of
fishing, boat making and maintenance
services to protect and promote
livelihoods of local population
 COPHCL would take effective measures
for social sector development
19
4.4. CPEC Other Projects: -
Project Name
Cross Border Optical Fiber Cable
Pilot Project of Digital Terrestrial
Multimedia Broadcast (DTMB)
Early Warning System (EWS), Pakistan
Meteorological Department
4.5. CPEC Rail Based Mass Transit Projects: -
Project Name
Karachi Circular Railway
Greater Peshawar Region Mass Transit
Progress Update
 Ground breaking cermony performed by
the Prime Minister
 Work commenced October 2015
 Project Completed and inagurated by
 Prime Minister in july 2018
 Project completed.
 Demonstration project with Chinese side
is being processed.
 PC-1 of the Demonstration project
approved by CDWP on 2nd May 2018.
 PC-I for CPEC is being revised in light
of CDWP observations
 Planning Division allocated EWS
(unapproved project), Rs. 100.00
million for PSDP Projects 2017-18
 EWS stands split between CPEC and
World Bank
 Work is at advance stage with World
Bank
 The components don’t overlap
 System will be integrated to draw
maximum benefit
Progress Update
 JCC agreed in principal for inclusion of
Mass Transit System as part of CPEC
component.
 Transport Working Group has been
asked to work on the projects based
further studies and consultation.
 Feasibility of Karachi Circular Railways
completed in May 2017.
 Groundbreaking is expected in 2019.
 JCC agreed in principal for inclusion of
Mass Transit System as part of CPEC
component.
 Transport Working Group has been
asked to work on the projects based
further studies and consultation.
 Feasibility of Greater Peshawar Region
20
Quetta Mass Transit
Orange Line - Lahore
4.6. CPEC New Provincial Projects: -
Project Name
Keti Bunder Sea Port Development Project
Naukundi-Mashkhel-Panjgur Road
Project connecting with M-8 & N-85
Chitral CPEC link road from Gilgit,
Shandor, Chitral to Chakdara
Mirpur - Muzaffarabad - Mansehra
Road Construction for Connectivity
with CPEC Route
Quetta Water Supply Scheme from
Pat Feeder Canal, Balochistan
Iron Ore Mining, Processing &
Steel Mills complex at Chiniot, Punjab
4.7. CPEC Proposed Special Economic Zones (SEZs): -
Project Name
Rashakai SEZ, KP
Mass Transit is under process.
 JCC agreed in principle for inclusion of
Rail Based Mass Transit Systems in
Provincial headquarters as part of
 CPEC. JWG on Transport Infrastructure
has been asked to complete the
necessary formalities.
 Feasibility of Quetta Mass Transit is
under process.
 Construction work is underway.
 Orange line project will be complete in
2019.
Progress Update
 Further studies and consultations to be
initiated
 Projects referred to concerned JWGs for
consideration
 Further studies and consultations to be
initiated
 Projects referred to concerned JWGs for
consideration
 Planning-PC-1 preparation is underway
 Further studies and consultations to be
initiated
 Projects referred to concerned JWGs for
consideration
 Planning-PC-1 preparation is underway
 Further studies and consultations to be
initiated
 Projects referred to concerned JWGs for
consideration
 Approval of PC-1 in process
 Relevant Provincial Govts. to work out
proposals on implementation of projects
 Relevant Provincial Govts. to work out
proposals on implementation of projects
Progress Update
 Feasibility studies of SEZs is shared
with Chinese side.
21
China Special Economic Zone Dhabeji
Bostan Industrial Zone
Allama Iqbal Industrial City (M3),
Faisalabad
ICT Model Industrial Zone, Islamabad
Development of Industrial Park on
Pakistan Steel Mills Land at Port Qasim
near Karachi
Special Economic Zone at Mirpur,AJK
Mohmand Marble City
Moqpondass SEZ Gilgit-Baltistan
4.8. CPEC- Social Sector Development Projects: -
Project Name
People to People Exchanges
Transfer of Knowledge in Different Sectors
 The MoU and Engagement Agreement
for the development joint undertaking of
the RSEZ project was signed between
KPEZDMC and CRBC in January
2018.Subsequently, the two parties set
out to negotiate the terms of Joint
Venture Agreement, which has already
been signed in November 2018.
Presently, the two parties are in end
stages of finalizing and signing the
Concession Agreement, following
which the Ground Breaking of the
project will take place.
 Feasibility studies of SEZs is shared
with Chinese side.
 Feasibility studies of SEZs is shared
with Chinese side
 Feasibility studies of SEZs is shared
with Chinese side
 Feasibility studies of SEZs is shared
with Chinese side
 Feasibility studies of SEZs is shared
with Chinese side
 Feasibility studies of SEZs is shared
with Chinese side
 Feasibility studies of SEZs is shared
with Chinese side
 Feasibility studies of SEZs is shared
with Chinese side
Progress Update
 Efforts for intensification of
People to People contact, media
and cultural exchanges
(including movies, drama,
theatre etc.) would be done
through agreed yearly
programmes. Both sides resolved
to promote Chinese and
Pakistani culture and heritage as
a way of long-term partnership
 Experts from industrial zones, rural
22

and urban development, job creation

Establishment of Pakistan Academy
of Social Sciences
Transfer of Knowledge in Education
Sector through Consortium of
Business Schools
& SMEs, water resources
management & treatment and
agriculture.
 Training workshops on industrial
zone held from 11-18th October
2017.
 Efforts to being made for
establishment of PASS with the
Chinese Academy for Social
Sciences. HEC has been made focal
agency on Pakistan and consultative
process has commenced.
 Consortium of Top Business Schools
from Chinese and Pakistan Side
established. HEC is leading the
Project.

5. CPEC Opportunities: -
5.1. Agglomeration Economy: -
The actualization of agglomeration economies lies in the top tier of opportunities that CPEC is
going to breed in Pakistan. According to world development indicators, in 1960, 11.52% of the
population was living in urban agglomerations, 18.14% in 2000 and it increased to 22.33 in
2017. Urban planners/ scholars have been citing agglomeration economies as making the actual
backdrop of growth in the mega-cities and large city-regions in the world. Returns of economic
activities increase in direct proportion with increasing the scale of urbanization, conditional only
to the sustainability of efficiency of all the respective urban fabric. Here local governments,
businesses, and consumers are easily reachable to each other, making the possibility of
materializing a whole greater than the sum of its parts. Pakistan has been lagging behind in
agglomeration economy due to a number of factors. CPEC is setting up a fabric of energy
infrastructure components, which are going to create a matrix strong enough to hold together its
agglomeration economies. To stitch this fabric together in a seamless whole requires a vibrant
system of urban governance, wisely chosen loci for the urban agglomerations, and development
of skills and knowledge. Making the most out of CPEC opportunities, Pakistan should also
transform its economically static urban agglomerations. To build the pending urban, industrial,
and economic dreams, CPEC brings a high time for planning and development departments to
come forward in collaboration with consortia of respective scholarship and construct the designs
of materializing agglomeration economies. Node cities of CPEC connecting whole Pakistan and
establishment of SEZs have a great potential of agglomeration economy. These venues have a
huge potential for SMEs development, job creation, and contribution in the overall economic
development of Pakistan.
23

5.2. Optical Fiber Connectivity: -

The fiber cable connectivity plays an important role to facilitate and boost the tourism industry in
Gilgit-Baltistan (G-B) and Azad Jammu Kashmir (AJK). It can be used to advertise natural
tourist spots of G-B and AJK at international level and will enable many tourist services e.g. use
of social websites, GPS system and with technology, tourists would be able to do online
bookings of hotels well ahead of time.
Fiber optics project under CPEC plays a vital role for unimpeded trade through Khunjerab border
and will provide same internet facilities as available at any developed part of the country. As
digital infrastructural deficit in GB is one of the biggest hurdles for efficient cross-border trade
facilitation between China and Pakistan through the Khunjerab border. The availability of new
internet connectivity will help to modernize government administration processes which will
enhance the delivery of public services and provision of information through the Internet. It will
also enable various e-government facilitates such as the construction of national data centers,
safe cities, intelligent transport systems and various single windows operations for the better
security and easiness of local people. The inception of 3G/4G connectivity in G-B and AJK will
provide high-speed internet access for the student of universities. Moreover, it will also help
Higher Education Commission of Pakistan (HEC) to introduce more online education, distance
learning degree programs, virtual classrooms, digital library to access books from anywhere
anytime, and e-learning short courses and online job portal for students studying in universities
and their collaboration with related companies and industries for the local people of G-B and
AJK. The inception of Optical Fiber Connectivity under CPEC will further expand the e-
commerce market of Pakistan which is expected to grow up to US$1 billion by 2020. Recently
world’s largest e-commerce company, Alibaba signed a MoU with the Trade Development
Authority of Pakistan to promote digital entrepreneur culture for small and medium enterprises
(SMEs) in Pakistan. It will also provide a platform for different training programs for SMEs in
the field of e-commerce. As a result, it will enhance foreign investment by exporting Pakistani
products to international markets. This fast and secure connectivity will also help to
revolutionize the payment method by introducing the concept of digital banks for e-transactions.
Currently, in Pakistan, around 95% of the e-business payments are being paid by cash on a
delivery system which is one of the major hurdles facing by existing e-commerce companies,
their customers and young entrepreneurs for the online startup businesses in Pakistan.[7]

5.3. Housing Challenges in Pakistan: -

Housing is the acknowledged as the core policy challenge by the PTI led Government. Estimates
of State Bank of Pakistan enlists that there was a backlog of 4.4 million houses only in the major
urban centers of Pakistan (Sheikh 2017). Therefore, it is expected that by 2035 five biggest urban
centers of Pakistan will account for 78% of total housing shortfall. Likewise, the rural housing
sector is no exception to the above-mentioned scenario but here urban-centric housing is focused.
Principal causes explaining worsening urban housing problem in Pakistan are particularly related
to demographic shifts which resulted in the high urban population growth. Other complementary
causes are; changing sociological dynamics in the urban areas and social dislocations in rural
areas. These reasons directly cause an increase in housing needs. Consequently, the housing
process has risen exponentially much faster than incomes which made housing predominantly
24

problem of both middle- and low-income people in Pakistan. In this regard, there are new
avenues of opportunities for cooperation between China and Pakistan in order to effectively
address and manage urban-centric housing question. China could extend meaningful policy
insights on its own experiences in dealing the housing policy issues primarily based on four
following reasons;
 China now represents the world’s largest construction market in terms of built space,
adding over 2 billion square meters of floor area annually-nearly half the global total.
 Half of China’s annual constructed space is residential, which resulted in China’s boom
in residential construction.
 Recent housing sector reforms in China during 1988 and 1998 which sponsored
comprehensive market-based housing provision.
 Previously China has the experience to addressed housing problem on social grounds
rather than relying on market-oriented mechanisms.
Based on the above-mentioned Chinese experiences in the housing sector there are an extensive
set of opportunities to address the dire need of housing in Pakistan. Three main opportunities
could be; Incorporate housing as a new avenue of profitable investments under CPEC by
encouraging Chinese construction/ housing companies to build affordable houses schemes in
Pakistan. Frame robust regulatory frameworks for the housing sector in order to protect the
housing rights of the people of Pakistan. Ensure the provision of suitable land for the affordable
housing through the mechanism of land zoning, land pooling and engaging the landowners by
sharing the property rights, such as providing them planned plots instead of land compensation.

5.4. Marble Sector Potential: -

Pakistan’s exports basket is limited, and markets are concentrated. Textile contributes lion’s
share of our export earnings. However, Pakistan is endowed with abundant resources, if tapped
efficiently, will provide sufficient foreign exchange earnings. One such natural resource is
Marble and Granite (or dimension stones). Estimated reserves of marble and granite in Pakistan
are respectively 300 and 1000 billion tons. These numbers place Pakistan 6th largest producer of
the dimension stones. Major colors in marble include white, grey, black, green, pink, brown and
yellow, and can be found in Buner, Mohmand, Mardan, Parachinar, Gilgit, Hunza, Lasbella and
Khuzdar. Regarding granite, they can be found with black, green, pink, grey, gold, yellow and
red colors in regions such as Gilgit, Dir, Chitral, Malakand, Swat, Swabi, Kohistan, Nagarparker
and Chagai.
Despite the potential of the sector, marble and granite exports of Pakistan are 2% of its total
exports and are mostly in raw form i.e. blocks and slabs. Top export destinations in the year 2016
are China (89%, $31M worth of exports), South Korea (1.93%) and Saudi Arabia (1.8%). Its
contribution to the country’s GDP is only 0.5% and provide jobs to nearly 40,000 people. Many
reasons can be attributed for not harnessing the sector’s potential such as lack of stone
dimensioning technology, regulations, lack of focus on value addition and investment.
Pakistan Stone Development Company (PASDEC) has been founded in 2006 to promote the
marble and granite sector. The company has taken many initiatives to make the sector globally
25

competitive. For instance, the initiatives regarding the minimization of quarrying waste from 85
to 45%, developing procedures to ease business operations in the sector, training workforce,
promoting strategic partnerships and export marketing.
Nevertheless, the huge potential still exists to exploit the sector. The booming construction
industry in China offers tremendous opportunity for investors of both the countries to make joint
ventures and take the sector ahead. Possible joint ventures can be formed in SEZs of Mohmand
and Rashakai. High-quality marble in Mohmand and better connectivity of Rashakai economic
zone via M1 motorway and its proximity to current marble clusters presents an ideal place for
investment. The planned special economic zone in Buner and its existing 500+ marble factories
connected through Swat Expressway via Palai and Ambella will provide further alternative
option for foreign investors to take advantage of the unparallel marble reserves of the country.
Also, Moqpondass and Bostan SEZs show potential to top the marble reserves of Balochistan
and GB, respectively.

5.5. E-Technology Through Optical Fiber: -

The 44 million Dollar Pak-China Optical Fiber Cable (OFC) project completed in 2018 is a part
of CPEC early harvest projects, featured with the development of ICT via the communicational
infrastructure of around 820 kilometers OFC from Rawalpindi to Khunjerab. This project will
enable high-speed international connection to cater to the rapidly growing internet needs.
Moreover, it will help to boost the digital innovation in the country according to the universal
trends along with providing Pakistan with a global platform of connection and making a positive
impact on the lives of local masses. Besides, OFC project will bring new skill development
dimensions and training programs for operation by integrating different sectors with ICT. This
will emerge the requirements of IT and telecom services division jobs and trainers for
operational and execution mode, raising the IT-related employment opportunity in below-
mentioned sectors along with other key attributes, like positive impact on the lives of local
masses. Besides, OFC project will bring new skill development dimensions and training
programs for operation by integrating different sectors with ICT. This will emerge the
requirements of IT and telecom services division jobs and trainers for operational and execution
mode, raising the IT-related employment opportunity in below-mentioned sectors along with
other key attributes, like:
Providing a scheme of integration via Broadband Avenue along with high internet speed across
the region via connecting the villages with urban areas and bringing efficiency in the processes
of all the government departments, schools, colleges, universities, healthcare institutes, research
and development institutes, marketing and business operational practices. Supplying public
internet access programs which will benefit students in research and inte- grated learning
programs, job seekers for connecting their skills with available opportunities and enhancing their
existing skills via online career courses, and business personals for export-oriented relations with
potential global partners along with merchandising their manufacturing products.
Introducing the concept of e-governance with the focus on providing all the government services
electronically to the local citizens. Furthermore, operating various governance applications with
optimal utilization of ICT resources while allowing for the decentralized implementation.
26

Presenting technology for security purposes such that providing online emergency, safety and
disaster-based services to the citizen in real time to minimize the irreplaceable losses.
Establishing technological tourism and travel facilities for visitors and tourists by launching the
travelling structure information, attractive tourism spots and available travelling
agents/consultants on particulars at a single portal.

5.6. Exchange of Arts and Crafts: -

With the initialization of CPEC, concerns about culture and Chinese influence have been raised
particularly by local residents where the cultural norms, values and traditions are well rooted in
the region. It is equally vital to show each other the cultural norms and values to develop
acceptance and respect for being different and yet similar. In this regard, art galleries and artists
can play a strong role in portraying both cultures through paintings, posters and script. Art
galleries may invite Chinese artists to showcase their work as well as our artists both
painters/actors should participate to exhibit their work in China. Local artists should be given a
chance to be the part of such caravans so that they can take the responsibility to share and
preserve local cultures.

5.7. China Pakistan Joint Development of Museums and Storytelling

Theater: -
A lot of opportunities are there in the coastal region of Balochistan which is selected for coastal
tourism. This is “2+1+5” tourism spatial structure in Pakistan which includes two centers, one
axis and five zones: Karachi Port and Gwadar Port as the two centers, and the coastal tourism
belt as the development axis, and five tourist zones of Jiwani & Gwadar tourism zone, Jhal Jhao,
Ormara, Sonmini and Keti Bander. Apart from water safari parks and other recreational activities
museum and Storyteller Theater can be an addition to attract tourists. Such activities more
frequently would become a mean to attract local and foreign tourists. Moreover, shrines, forts,
temples or other assets may need to be preserved for cultural growth to showcase our culture to
the Chinese side.

5.8. Salvaging the Organic scrumptious Fruits of Gilgit Baltistan: -

Gilgit-Baltistan (G-B) has the capacity to produce approximately 200,000 tons of scrumptious
fruit every year comprising of Apricots, Almonds, Peaches, Apples and Walnuts. Whereas the
handling capacity of this fruit is in such a bad shape that according to an estimate approximately
70% of produced fruit in Ghizer district alone fails to reach any market. There is a dire need for
acquiring modern tools and techniques to perform picking, sorting, handling, processing,
branding, practicing, storing, marketing and distribution for this resource in an efficient manner.
Apricots, Peaches and Berries picked through manual labor has a very limited shelf life, roughly
between 3 to 4 days, therefore there is a need for cold storage to store and transport this fruit to
far-flung areas to address their needs. Lack of cold storage/supply chain facilities is causing a
loss of approximately 50,000 tons of fruit (in G-B/Northern Areas) every year. This amounts to
approximately 11 Billion rupees in case we are talking about fresh apricot only. Packaging is yet
another ignored aspect of the fruit industry in G-B, attractive packaging of Chinese dry fruit
caused a steep drop in the price of local produce last year. Chinese Walnuts, though less tasteful
27

but well packaged dominated the market, thereby causing huge loss to local Walnut produces.
Local Walnut produced organically tastes much better than the one imported from China, but the
efficient Supply Chain and packaging is bringing the Chinese Walnut to our markets on
relatively cheaper rates.
These above-mentioned challenges offer numerous opportunities to local/foreign Entrepreneurs
and enterprise brands who must come forward along with Government bodies assistance to fill
these gaps and assist local industry in coming forward to mitigating this imminent threat.

6. Financing and Financial sector Integration: -

6.1. Exports Promotion Through CPEC: -
Development of Special Economic Zones (SEZs) under CPEC provides an opportunity to boost
exports of the country if the special focus is given to the imports of the other economies. It is
imperative to consider the development of the tribes that produce products imported by other
economies while developing SEZs. An increase in the exports shall contribute to decreasing the
current account deficit as a result of high inflows of dollars. Furthermore, a sustainable increase
in the inflows through exports shall result in making Pakistan’s currency more liquid, hence
minimizing the risk of severe adverse fluctuations.

6.2. Innovation Modes of Revenue Generation Through CPEC: -

The main objective of fiscal policy is to increase revenue generation by capitalizing on the
identified new opportunities, particularly in the periods of high FDI influx and economic growth.
CPEC being discussed as game changer would bring along certain new sources for revenue
generation that could be used to meet the increased demand for expenditure. One of the
innovative modes for revenue generation that CPEC offers could be to levy higher or specialized
tax rate on the disposal of the land near to the infrastructure development zones under CPEC as
the value of property adjacent to these zones will appreciate significantly in value as result of
these infrastructure developments.

7. Policy Imperatives for CPEC

Most of the discussion about CPEC has so far focused on the financing and indebtedness in the
future but the success of this initiative lies in the successful interaction between investment,
institutions and policy. What kind of policies are needed to maximize benefits and minimize
costs to the country? There are several but at least six areas need careful design and execution.

7.1. Energy Policy: -

The addition of 10000 MW of electricity that is scheduled to become available to the National
Grid by 2018 would overcome the energy shortages. However, it may create unintended adverse
consequences for the public finances and liquidity of the companies involved in the energy
supply chain if other components of energy policy are not put right. The Circular Debt that has
now become a perennial problem would get worse if the gap between the purchase price of
power paid by the DISCOs and the sale revenues collected by them is not bridged. The uniform
tariff rate, the Transmission and Distribution losses and energy thefts, the discrepancy in the
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amount billed and the amount recovered, and the growing account receivables underpin this
problem. Unless the DISCOs are either privatized or restructured to become commercial
organizations free from political interference, this growing circular debt would end up widening
the fiscal deficit. The cost of generation to the end users can be reduced if competitive energy
markets and energy exchanges are set up, auctions are held for tariff determination and multiple
buyers are introduced instead of the present single buyer model The NTDC would recover only
the Wheeling Charges for the use of their transmission infrastructure.

7.2. Industrial Policy: -

The Special Economic Zones (SEZs), Industrial parks etc. to be set up along the Corridor should
be open to Pakistani firms on the same terms as to the Chinese. Any incentives given to the
Chinese would be equally applicable to all investors. Land is to be allotted on long term lease
rather than outright purchase. The leases should be auctioned only to genuine, pre‐qualified and
screened bidders to eliminate land grabbers and speculators. In Balochistan, some portion should
be reserved for local investors wherever it is feasible to do so without the right of alienation. The
lease should incorporate a provision that the allotment of land would be cancelled if the project is
not operational within three years... All infrastructure works – power, gas, water, roads, effluent
plants, amenities – should be in place before the possession is passed on.
Pre‐Feasibility studies should be carried out by the Zone authorities through expert Consultancy
firms or universities, to provide base line data and information about the kind of projects that can
be established in different zones.

7.3. Trade Policy: -

External payments on account of repatriation of profits and debt servicing of CPEC projects
would put pressure on the Current Account. Exports have to grow at least 15 percent annually to
meet these new obligations and remittances have to increase at their historical level. Exchange
rate has to be managed deftly to stimulate new export products, new firms, and penetration into
new markets, but ensuring that prices of imports of capital goods, machinery and equipment are
not hiked up to make new investments unattractive. Pakistani and other foreign companies
winning competitive bidding should receive the same tax treatment to ensure level playing field.
Free Trade Agreements have to be renegotiated to preserve the comparative advantage of
Pakistani exports and tariff quotas introduced to safeguard against material injury to Pakistani
manufacturers. Import tariff rates have to be gradually reduced to enable Pakistani companies to
participate in global supply chain.

7.4. Foreign Exchange Regime: -

The current foreign exchange Regime is becoming too restrictive, for making timely payments to
suppliers, vendors, and financiers. Further restrictions would only divert inflows towards
informal channels, resulting in a vicious cycle. As inflows through official channels recede, and
the demand for outflows through banking channels at interbank rates rise, the State Bank of
Pakistan (SBP) would have to further tighten external payments, prolong the timing and disallow
certain genuine payments to conserve their reserves.
29

As more payments are pushed to the kerb market, the differential between the official and open
market rates would widen. Exporters and remitters would channel their earnings at the higher
open market rate, reducing the supply in the interbank market. The increased demand by
importers and other consumers of foreign exchange at the lower official rate would lead to a
demand‐supply disequilibrium.
Market sentiment plays an important role in the determination of exchange rate, and any hint that
outflows on account of payments to the Chinese would lead to further restriction in foreign
exchange regime would erode the confidence of the market players.

7.5. Financial Policy: -

Commercial banks should finance Pakistani Companies either stand alone or in joint ventures
with the Chinese companies in collaboration with the Infrastructure Development Fund that
would carefully scrutinize the proposals from potential investors, calculate the future cash flows,
and carry out scenario analysis for risk mitigation. For the small and medium enterprises
working either as sub‐ contractors to the large firms, or providing goods and services for the
CPEC projects, or setting start‐up businesses, the existing Funds set up by DFID, USAID etc.
should be geared up to meet this demand. In Balochistan, Southern KP, GB, urban and rural
infrastructure projects that link the main highways and motorways under CPEC with the
communities should be given priority by the respective governments in the allocation of the
Provincial Development budgets.

7.6. Skill Development Policy: -

One of the prospective benefits for CPEC projects for Pakistan would be the training and
development of skilled manpower. Plans have to be made to assess the long-term manpower
requirements, both for construction as well as operational phases of CPEC projects. In light of
this assessment, different categories and different levels of training programs have to be designed
and then assigned to credible pre‐qualified providers. Particular attention should be given to train
the youth from the backward districts of the country, starting with Gwadar all the way to the
Karakoram Highway.
A number of private and non‐profit organizations are actively engaged in quality vocational and
technical training, mainly in Karachi and Punjab. These organizations should be invited to set up
similar facilities in other parts of the Country, where CPEC projects are being executed. In
addition to this formal training, internships and attachments with the Chinese companies working
on the projects should be made an integral part of the curriculum. IF there is one lasting legacy
for which CPEC should be remembered it is this investment in producing skilled and trained
technical manpower of different levels of expertise. The other missing link in which Pakistan is
weak is the institutional capacity for which a separate analysis would be required.

8. HOW DOES CPEC BENEFIT PAKISTAN?

Ongoing CPEC projects offer many advantages for Pakistan in terms of infrastructure that will
drastically transform the country for the better. As the gateway city to CPEC, improvements
begin at the main shipping port of Gwadar. A huge $4.8bn injection will upgrade the town,
30

making it a modern port city of international standards, a vibrant metropolitan city and South
Asia’s busiest trading hub by 2023. 50,000 professional jobs are expected in the future bringing
with them significant spending power that will drive the regional economy in terms of goods,
services and development.
With the expected population growth, it is necessary for CPEC to account for the power
consumption needs of the local community. The new Quaid-e-Azam Solar Power Park in
Bahawalpur is expected to generate 100 MW of clean energy for Pakistan. An additional $35bn
is being spent by China to construct 19 new power plants.
First-rate transport networks are very important for any developing country. CPEC has
earmarked millions for the establishment of new roads and train links as well as the improvement
of current networks, with over 2,000 km of extensive construction connecting China to Gwadar.
In order for Pakistan to be propelled into the future there is the need for a robust digital and
technological solution. Growth of the country’s IT infrastructure will be enhanced by over 820
km of fiber optic cabling. China is also rolling out additional support for 4G mobile networking
with $225 million of investment that will in turn boost smartphone usage. Google has already
cited Pakistan as one of the fastest growing digital populations in the world.

8.1. Benefits that CPEC Brings to Pakistan

8.1.1. Quaid-e-Azam Solar Power Park Bahawalpur
The Largest Solar Power Plant: The 100MW Solar Power Park in Bahawalpur has generated not
just jobs but the cleanest and the most reliable source of energy to Pakistan, thanks to the
collaboration of the governments of China and Pakistan. This unique solar project, is the biggest
solar producer in Pakistan and has surpassed its intended energy production by 4.42 % in 2015-
2016 and 5.48 % in 2016-2017.
8.1.2. $4.8 Billion is being spent by China
In developing Gwadar to be the busiest shipping port in South Asia by 2022: Gwadar has
become a major global port city and will be the gateway of trade for the continent, linking China
with markets in Central and South Asia. Over 500,000 professionals are expected in the city by
2023.
8.1.3. Lahore Line Metro Train:
Lahore Line Metro Train promises to connect the vast city of Lahore from one end of the city to
the other end. A One-Of-A-Kind project, funded by China, this train line will drastically improve
Pakistan’s infrastructure and will cater to 250,000 passengers on a daily basis. The train was
recently trialed and is due to be completed in a matter of months.
8.1.4. 2,000 km of rail and road networks connecting Kashgar, China to Gwadar,
Pakistan:
CPEC solely focuses on the infrastructure of Pakistan from North to South along the economic
corridor. The chains of roads and rail networks ensure both the investors and the public a route to
31

communicate more efficiently and it is expected that both countries will see economic benefits. It
is estimated that around $2-2.5 billion revenues per year could be added to the economy of
Pakistan within a few years.
8.1.5. 3000 locals were hired by Sahiwal coal fired power plant:
Coordinated by the Ministry of Water and Power of Pakistan, Sahiwal’s Coal Fired Power Plant
promises to deliver 1.3MW of energy and was completed in 2017, a landmark in the history of
Pakistan and China.
8.1.6. $35 Billion is being spent by China to construct 19 power plants:
Out of the $46 billion, $35 billion is being invested by Chinese firms and companies. This huge
investment promises to bring 12,114MW of energy to Pakistan. Given the current crisis of
Pakistan’s energy deficits, this gigantic investment promises to deliver Pakistan all its energy
crisis solutions in a very short span of time.
8.1.7. 30,000 direct job opportunities have been created in power and infrastructure
sectors for Pakistanis.
Specifically, 5,000 jobs have been formed at Port Qasim Coal Power Project and It is estimated
that around 800,000 employment opportunities will be available in the next two decades, owing
to the diversity and nature of the ever-expanding projects and investments of CPEC.
8.1.8. Karakoram Highway Phase 2:
The phase 2 of Karakoram highway connects Thakot and Havelian in KPK (Khyber
Pakhtunkhwa) in a 120km highway and is already under construction. The road is considered to
be a major highway that would establish a foundation of networks from the north to the south.
The project is expected to be complete in the first quarter of 2020. The financial estimate of this
project is $1.36 Billion.
8.1.9. Special economic zones where companies can enjoy business incentives and tax
holidays
To facilitate rapid commercial and economic development and encourage investment from
industries around the world, Pakistan promises to set up special economic zones. These zones
can be found on the outskirts of large cities in Pakistan such as Faisalabad, Islamabad, Mirpur,
Nowshera, Karachi, and Gilgit.
8.1.10. 2.5% projected annual growth for Pakistan via CPEC:
The projects being undertaken in CPEC are promising to help boost the GDP of Pakistan to
7.5%. It has been estimated the introduction of CPEC in Pakistan is going to give a straight boost
of 2.5% to the current GDP of 5%. [8]

9. Conclusion: -
Earlier, Pakistan has gone through stages of political unpredictability and turmoil that enfeebled
the country’s progress roadmap and also affected policy geographic stability. The CPEC appears
to be a very critical project for Pakistan. The construction of CPEC is an important agreement for
the country which has boundless benefits for its economic betterment.
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China-Pakistan Economic Corridor is a strategic economic project aiming at regional

connectivity for the economic development of Pakistan and China respectively. In this context,
objective of this study is to forecast the impact of CPEC related economic activities on overall
and sectorial energy consumption and their saving potential in Pakistan by 2030. We employed
Johansen-Juselius Co-integration analysis to estimate the long-run relationship between energy
consumption and its underlying factors both at aggregate and sectorial level and investigated the
impact of CPEC on future energy consumption by 2030 using scenario analysis. Co-integration
results demonstrate that both at aggregate and sectorial levels, elasticity of energy consumption
with respect to price is negative while it is positive for GDP and energy intensity. Mixed results
have been found for elasticity of energy consumption with respect to foreign direct investment.
In aggregate analysis, the trade openness plays an influential role in increasing energy
consumption. Baseline scenario depicts that Pakistan will experience approximately 41% more
aggregate energy consumption in 2030 from its 2013 level. Our results indicate that CPEC
related economic activities will boost energy consumption by approximately 48% and 57% in
2030 from its 2013 level under moderate and advance scenario, respectively. In comparison with
baseline scenario, loss in energy saving potential under moderate and advance scenarios will be
3.08 million TOE and 6.32 million TOE respectively in 2030. Sectorial analysis revealed that
under baseline scenario, energy consumption in industrial and commercial sectors in 2030 will
increase by more than 136% and 414% to their values in 2013 respectively. In advance scenario
the energy consumption will increase by approximately 312% in industrial sector by 2030 from
its level in 2013.
Therefore, losses in energy saving potential can be at increasing trend in 2030 i.e. 25.08 million
TOE in comparison with the baseline scenario. In the commercial sector, energy consumption
will be only 26% higher than its 2013 level due to CPEC related economic activities under
advance scenario. Commercial gains in energy saving potentials can be at increasing trend with
the passage of time till 2030. It is estimated at 6.43 million TOE in advance scenario in
comparison with the baseline scenario. For risk analysis we apply Monte Carlo simulation.
Monte Carlo simulation results are very close to scenario design results based on co-integration.
This verified not only our scenario BAU results but also give the different possibilities of future
energy consumption by 2030. The CPEC related investment into installed generation capacity is
expected to meet the increase in electricity demand and reduce the existing energy shortages,
their environmental impacts cannot be ignored as most of the electricity to be produced in these
projects is based on the coal related technologies. Targeted interventions to reduce
environmental implications from these projects with appropriate abatement activities are
required.
In this context, loss in overall energy saving potential calls for targeted energy conservation
policies. Energy conservation should be made part of the overall energy polices in the country
and energy intensity targets should be implemented for different sectors of the economy to
realize its overall energy saving potential and energy policy should aim at achieving energy
resource conservation with investment strategies to promote energy efficient technologies.
Government should also make careful accounting and related planning to account for potential
increase in energy demand due to CPEC related economic activities for each sector of the
33

economy. Furthermore, as the increased economic activity under CPEC is expected to carry
environmental implications, it is important to analyze and forecast the future GHGs emissions to
plan appropriate abatement activities.

10. References: -
[1]. http://cpec.gov.pk/introduction/1
[2]. http://cpec.gov.pk/downloads
[3] Raza, “China to finance three more road projects under CPEC,” Dawn, December 27, 2016.
[4] GoPak, “Consultancy Services.”
[5] Dawn, “Nawaz inaugurates completed portion of Karachi-Hyderabad M-9 motorway,”
February 3, 2017
[6] Express Tribune, “Orange Line moving along: 5 stations to be handed to contractors,” April
6, 2017.
[7] http://cpec.gov.pk/brain/public//uploads/documents/Final_Mag-3-29-08-19_compressed.pdf
[8] https://www.cpicglobal.com/10-benefits-of-cpec-2/