Image Courtesy: Financial Express
Notwithstanding the problems China Pakistan Economic Corridor (CPEC) is expected to encounter as China progresses with the project to link its western provinces to Gwadar port, there are also a few issues that run against the policies it seems to be opting for in its domestic power generation sector. The most contradictory of these remains greater reliance on coal fired power plants planned as part of CPEC. Also of interest is the prospect, simultaneously of Chinese coal being used to meet the fuel requirements of such projects. The author analyses these factors and lays bare a few facets of Chinese intent.
COAL FIRING ‘CPEC’: COLONIZATION OF PAKISTAN & ENRICHMENT OF CHINA
CPEC is getting more and more interesting by each passing day. Apparently, the end game of CPEC will tantamount to Colonisation of Pakistan and Enrichment of China as many others are predicting My conclusions are based on analysis of writings and articles from international sources and eminent Pakistanis themselves. In fact, as a military man, I wanted to write on the security situation and geopolitical aspects of CPEC. I read up some articles and something hit me square in the eyes. It needs to be shared with all those who have an interest in CPEC. More importantly it needs to be shared with the poor Pakistani who is genuinely being taken for a ride and soon will become a slave in his own land.
Security Issues. Before I get to the guts of how coal firing power projects are going to Colonise Pakistan and Enrich China, there are a few head winds these projects are facing. The security situation in Baluchistan, Gilgit and Baltistan is worsening steadily. There are clear indications that as CPEC progresses, the insurgency levels in these areas will increase. This project is seen to be inimical to and without the involvement of local communities. It will face resistance locally.
It will need to be guarded more than the planned levels. Pakistan has chosen to guard CPEC with its Army. So, the Army is going to end up being pitted against its own people- the very people it wants to protect and land it wants to develop! The more it pumps in troops to protect the project, the more will be the militarisation of the project and more will be the alienation. This negative cycle of alienation and protection will only ramp up with time. The third front of Pakistan will be very active. The first being India and the second being Afghanistan.
Political Twists. The evolving and uncertain political situation in Pakistan is predictable only for its unpredictability. China is clearly worried. Political chaos is an unfamiliar situation to them. Chinese statements that political developments in Pakistan won’t affect the CPEC is their exhibition of external calm amidst internal turmoil. Pakistani Generals are reportedly shuttling between Islamabad and Beijing, busy assuring their Chinese masters that CPEC will go through. Soon this project will be one to one between the Chinese and the Pakistani Army.
The Army, having contrived to unseat Mr Nawaz Sharif, will hereafter be busy portraying itself as the only credible national institution for safe guarding vital national interests i.e., CPEC against the corrupt, unaccountable and inefficient political class. However, I suspect their motivation is also largely fiscal in protecting or promoting their ‘MILBUS’ (military businesses). How will this guarantee by the Army, execution by discredited civilian government phenomenon go through? Sooner than later there will be a political backlash which will impact the project. Interesting times ahead as events unfold!
Coal Firing Energy
Outlay. $33 billion or nearly 70% of the CPEC outlay is expected to be invested in power generation projects. Energy is the dominant factor in CPEC. As per the CPEC website the broad division and summary of energy projects is as under
Coal-fired Power Plants – 5580 MW 41.24%
Coal-fired Power Plants – 3960 MW 29.26%
Hydropower Plants – 2690MW 19.88 %
Wind Energy Farms – 300MW 2.21%
Solar Energy Farms – 1000 MW 7.39%
Total – 13530 MW
Highest Per Capita Pollutant. Concentrate on coal fired plants only. At present Pakistan has an installed capacity of about 300 MW of coal fired energy. It will be ramped up by 9640 MW through CPEC. A whopping thirty-fold increase! In one stroke Pakistan will be converted from being a country with one of the lowest per capita carbon emission to one of the highest pollutants per capita. Also consider the emerging water situation simultaneously. coal based plants need a lot of water. Such an increase of power generation capacity needs enormous amounts of water, which is presently not available. To get an idea, 1 tonne of coal needs 24 bathtubs of water to realise its complete energy potential. Imagine the overall requirements!
Pakistan is a water stressed country and the situation will only worsen. So, the first collateral damage will be on water and agriculture. 29.26% of its energy mix will come from the coal at Tharparkar, which is mainly lignite. Lignite is one of the least energy-intensive and most polluting types of coal with heavy ash, as residue. Add to this the pollution from the plants which are going to use imported coal. Pakistan will be one of the most polluted countries. The second collateral will be the colossal fallout on health and hygiene of future generations of Pakistanis.
The Main Clincher: Coal
China’s Coal Export. However, the main clinch is elsewhere. 41% energy is to come from coal fired plants which will use imported coal. Where is this coal going to come from? My guess is Xinjang – where else? Xinjang has the second highest concentration of coal reserves of China. Untapped and locked! So, if you thought that CPEC road/rail infrastructure is only for transporting oil to China from the Gulf, think again. It is as much for exporting coal to Pakistan, Egypt and other Middle East and African counties where our friendly neighborhood Chinese are feverishly building Coal fired power plants.
It makes great economic sense to transport coal from Xinjiang directly to Pakistan and beyond through CPEC rather than all the way round from Shanghai. Incidentally, a 500 MW coal fired plant needs 1.2- 2 million tons of coal a year. Hence Pakistan will end up importing something like 20- 25 million tons of coal per year from China. It means approximately 10000 coal laden trucks to move over the Karakorams per day! Add the Egyptian and African volumes. Also add the volumes of cheap Chinese goods which will increasingly enter Pakistani markets to destroy local output and economies. It will be humungous traffic in a long-term perspective through unstable climate and geography. This arterial front will be very vulnerable indeed. Any disruption will have major repercussions on the Pakistanis and Chinese. A case of eyes wide shut?
Coal Based Projects – Economics. Turn to economics of coal based projects. China has loftily announced that it is scaling down coal based energy production as per the Paris climate deal and has announced closure/cancellation of more than a 100 existing / under construction coal based power plants. It is shifting to clean energy due to the huge pollution and environmental problems it faces. Very rosy picture? But the truth is different. There is a glut in Chinese coal based energy sector with capacity utilisation down to 50%. Hence the State is facilitating building of coal based power plants all over the world. So, it amounts to closing in China, relocating them elsewhere and exporting pollution.
Given the Chinese business sense, will some of these plants be dismantled, refurbished and relocated? Very likely. Of course, Pakistan will get its share of relocated/second hand coal plants. So, in effect Pakistan is being financed by China to buy idle and probably second hand Chinese capacity which would have rotted! Catch 22? No. it must be Catch 44. What a scam. China will laugh all the way to the bank. Pakistan will suffer the pollution and cough up the sums!
Microeconomics. Turn to microeconomics. All these plants are being constructed by Chinese companies using Chinese steel, cement, material and labour. Local procurement and input is negligible. As per Pakistani media, where local labour and material is being used, re-imbursement is only 60% as compared to what Chinese firms are being paid. So, Pakistan is paying 40% more for Chinese plants of doubtful origin and quality.
The next collateral is that there is no benefit for local businesses which are reportedly closing. Chinese firms have been given an assured return on investment of anything between 17-20%. Add exemption of duties and other duties and their effective return will go up to 25%. Hence, the man on ground will end up paying 25 – 30 % more for power. All Pakistan will get is some toll and road taxes which will anyway be marked up in the cost of electricity. Who will consume electricity at such exorbitant costs? The industry or the common man?
Pawn Broker Syndrome. Very interestingly, the loans are being negotiated with Chinese firms and government directly by the Pakistan Government. Institutional funding agencies like Asian Development Bank and IMF have been kept out. They have grave reservations about this whole project. Hence, they are sidelined. The scrutiny of these projects, finances and associated diligence is lacking. Viability of some of these projects is clearly suspect. That is why institutional financiers have also kept away.
There is heavy opacity shrouding these loans. Even the State Bank of Pakistan has been complaining that it has been kept out of the loop and is in the dark. Experts predict a loan default will be inevitable. In such an eventuality, since Pakistan has bypassed IMF against better counsel, there is minimal chance of a bailout. So, the local pawn broker/ money lender syndrome will become the norm. Pakistani land will go into Chinese ownership. The Land grab model already exists in Hambantota. Sri Lanka seems to be just about managing it well since it is only one port and a limited land. How will Pakistan get out of it? So many, projects at such inflated costs. Add the other infrastructure project costs, agricultural project costs and the result is there for everyone to see. Colonization of Pakistan is a certainty!
China – Transferring Pollution
A thought on the perfidy of the Chinese at the cost of repetition. It is clear that China is transferring pollution out of its country to the rest of the world by building coal based power plants all over. It will compound the whole issue by exporting coal to the plants which it builds.
The OBOR or BRI is all about China prospering by coal export at the expense of the rest of the world – pollution and environment be damned.
Chinese interests are at the core of this initiative at the expense of others. Of course, the cheap Chinese goods which will follow coal to destroy local economies is added poison. I am glad that my government has not fallen for it. The BRI is not good for the world at large.
Remember Enron project in India? In the mid-90s it was being touted as the best thing happening to India. In hindsight, the best thing was that the project failed. After three decades, there are no regrets. Similarly, the best outcome for Pakistan would be that CPEC fails. Pakistanis might be poor today, but they are free instead of being a polluted colony. May be CPEC will fail in due course of time due its own unviability. Already people in Pakistan are questioning these mega projects. May they make wise choices.
Pakistan Army has always prided itself as the ultimate safe guarder of the Pakistani nation. It lost half the nation in 1971 when it unleashed a genocide on its own people. They are on the verge of losing the other half by enforcing an environmental genocide on their people and leading their nation into a Chinese debt trap.
Lt Gen PR Shankar (Retired)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of BharatShakti.in
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