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PAK-CHINA BROTHERLY ENERGY COOPERATION

By Mehmood-Ul-Hassan Khan

Recently, many high officials and big business groups from China visited Pakistan and by discussing with the government’s high officials and the representatives of the private sectors they explored different valuable projects in the fields of energy, infrastructure and Railways in the country.

China Three Gorges Corp (CTGPC)

The Cooperation of China Three Gorges Corp (CTGPC) is a wholly state-owned enterprise. It is a huge clean energy group with owns and operates the world’s largest hydro-power station in China. It shows keen interest in the energy sector of the country.

CTGPC extended energy cooperation

China Three Gorges Corp (CTGPC) China’s largest hydropower developer is ready to invest $15 billion in Pakistan’s energy sector, an investment that could hopefully add 10,000 megawatts to Pakistan’s main grid over the next 10 years. The corporation also offered to develop multi purpose hydro electric projects through direct financing model based on 3Ps i.e. public private partnership.

The Chinese companies showed their keenness to invest $10 to $15 billion for the development of power sector in Pakistan which has around 175 billion tonnes of coal deposits in Thar. China has the expertise in coal energy which must be utilized for the tapping of Thar coal reservoirs.

Details of the Hydro-power Projects

Pakistan is passing through a severe energy crisis. It badly needs construction of big and small hydro-projects in the country to overcome the persisting energy shortage. The projects of hydropower i.e. Kohala Hydro Power (1100 MW), Bhunji (7100 MW), Bhasha, Dashu in Upper Indus Valley, and other Hydro Power projects in lower Indus valley were thoroughly discussed most recently with the Chinese representatives of public-private sector. China Three Gorges Project Corporation (CTGPC) signed an agreement with a private Pakistani firm, Associate Technologies (Private) Limited to invest $1.2 billion in 720 MW Karot Hydropower Project. The Karot project would be completed in four years and help Pakistan to overcome load-shedding problem.

Pak-China alternative energy cooperation

Chances are very bright for the development of alternative energy resources/projects in the country. Many Chinese companies have already offered their assistance in this regard.
China has also offered to start construction of 50 MW wind power project in Jhampir (Sindh) and which will be completed in 2012. Furthermore it has also planned to install 2000 MW wind power. China has also planned to invest in the 300 MW solar power projects in Pakistan.

Mutual cooperation in infrastructure and railways

Infrastructure plays very important role in the socio-economic development of any country and Pakistan is not any exception. Railways connect the different sectors of the economy and integrate its productive role in the national economy. In order to initiate different infrastructural projects in the country, the government has already sought the assistance of China. Some Chinese companies have already shown interest in infrastructure development in Pakistan including construction of Karakorum Motorway and the Railways.

Government’s strong commitment

On its part the government of Pakistan has issued letter of interest for the Karot Hydero electric project with 720 MW generation capacity. Its feasibility has already been approved and the project is currently at tariff petition stage. MOU for the Taunsa hydro eclectic project with 120 MW generation capacity has been signed and the joint development agreement of the project will be signed very soon. The Kohala hydro power project with generation capacity 1100 MW electricity is ready for tariff negotiations as the letter of interest of the project has been issued and the updated feasibility study already approved. Bunji hydro electric project another mega energy project being undertaken by the Three Gorges Project Corporation with 7100 MW generation capacity is ready for site survey as the MOU for the project was signed in august 2009.

Details of ongoing energy projects

The extended bilateral energy cooperation also consists of ongoing wind projects namely Karachi first wind farm, Karachi second wind farm and Punjab wind and solar projects are also at its advanced stages. The government of Pakistan also shows its intention to build a run of the river hydro project at Sukkur Barrage with China Three Gorges Project Corporation. Moreover, Joint Development agreement was due to be signed this month for the 120 Megawatt Taunsa Hydro electric project where the discharge is 10,000 cusecs is ready for joint development agreement.

Pakistan’s valid/attractive offer

The government of Pakistan also offered Chinese companies to invest in the Basha dam as well as large scale manufacturing of solar panels and wind energy turbines in the country, as the corporation has specializing in renewable energy development and operation and the country has a great potential of solar and wind energy.

Enhanced financial and banking cooperation

It is the need of the hour that both the countries should further strengthen its financial and banking cooperation. According government’s officials the Export-Import Bank of China will loan Pakistan $1.7 billion to develop a city-wide train system in Lahore. The 15-year loan will be disbursed in the next five years, and negotiations with Eximbank are under way to finalise other details.

Most recently, the Punjab government recently agreed to award the 27 km (16.7 mile) train line contract project to the Chinese company China North Industries Corp (Norinco). The project is likely to begin by the end of 2011. It is hoped that completion of this project will substantially decrease road traffic.

Relaxation on non-tariff barriers and technical barriers

It is strongly suggested that Beijing should relax non-tariff barriers and technical barriers and procedures need to be simplified for Pakistan. Chinese private sector and enterprises should continuously conduct exchange and cooperation with Pakistan in different sectors of the economy especially energy sector. Deliberations should also be carried out in joint ventures, technology transfer, tourism and transportation sectors.

Foremost duty of Public-Private sector of Pakistan

Public-private sector of Pakistan should pay more attention to the preparation work of investment projects, strengthen communication and exchange with chambers of commerce and industry and enterprises of relevant provinces of China. Pakistan must continuously improve the people, business and investment friendly environment and give Chinese enterprises an equal treatment practically to protect the legal rights of Chinese enterprises and Chinese citizen.

Further strengthening of bilateral trade volumes

There is an urgent need to strengthen the bilateral trade volumes between the two countries. Pakistan exported different commodities to China of worth $228.63 million, $244.59 million, $288.259 million, $354.092 million, $463.967 million and $575.903 million in 2001-2006. Whereas, Pakistan imports from China was $ 5 75.37 million, $839.00 million, $1,153.514 million and $1,842.270$ which clearly indicated balance of trade in favour of China. Effective implementation of free trade agreement (FTA) must be monitored.

Conclusion

The people Republic of China is our strategic time-tested and trustworthy friend. Energy cooperation between the two countries has multiplier effects and would pay dividends in the days to come. Keeping in view the emerging geo-political and geo-strategic scenarios in the region both the countries should also enhance defence cooperation and meaningful security pacts.

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