ISLAMABAD: China and Pakistan have decided to shift the focus of energy sector investments under the China-Pakistan Economic Corridor (CPEC) to hydropower development after capping capacity generation from conventional power projects at 11,110MW.

The energy projects included in the active CPEC list for implementation have either been completed or are in the final stages, having a total capacity of 11,110MW. The remaining capacity addition of about 6,000MW would be made in the hydropower sector over the next phase.

A senior official at the Planning Commission said the two sides had originally decided that total capacity addition under CPEC would be around 17,100MW and this was part of the agreement on CPEC Energy Project Cooperation.

He said the Pakistani side realised as early as May last year, based on presentations of National Trans­mission and Despatch Company (NTDC), that enough capacity had been contracted for the fast-track implementation and the government should move the remaining investments in the power sector to avoid a capacity trap.

Subsequently, the two sides agr­e­ed to make adjustments to the list of energy projects based on the recommendations of the CPEC Energy Planning Expert Group. However, by this time Punjab had managed to push through the second 1,300MW LNG project at Trimmu-Jhang.

It was, nevertheless, agreed that total capacity under CPEC would remain unchanged at 17,050MW. The remaining agreed capacity would be diverted to hydropower projects that need longer gestation period to fit in the future projections.

“Priority would be on development of hydropower resource on the Indus river,” said the official. He said an energy working group would be among the few delegations coming from Beijing in March to finalise the list of hydropower projects. Responding to a question, the official did not agree that the question of Chinese investment in $14 billion Diamer-Bhasha dam was over as reported by the Wapda chairman to a parliamentary committee recently.

He said a number of projects on the Indus Cascade — including the Diamer-Bhasha mega project — would remain part of the discussions as indicated in the CPEC long term plan and minutes of the 7th Joint Cooperation Committee (JCC) meeting in Islamabad.

Based on the NTDC’s assessment, the government had put on hold 1,320MW Muzaffargarh Coal Project, 300MW Salt Range Coal Project, 50MW Sunnec Wind Power and 525MW Combined Cycle Chichoki Mallian Plant. The Gadani Coal Park was given up much earlier.

The official said a total of four expert groups from China would be visiting Islamabad by March 15 on Pakistan’s request to keep momentum on procedural progress to dispel the impression of a logjam during the course of political changes in Beijing and Islamabad over the next few months.

On a positive note, he said, an agriculture expert group would also visit Pakistan for the first time to explore the way forward on cooperation in this particular sector. The three other groups would be related to Special Economic Zones (SEZs), energy sector, and oil and gas sector investments — particularly the development of a mega oil city at Gwadar.

The energy experts will review the progress on CPEC projects and will also discuss the inclusion of new hydropower projects in the portfolio. The hydropower projects located in Azad Jammu and Kashmir, Gilgit Baltistan and Khyber Pakhtunkhwa will be the main focus of the experts’ interaction.

The expert group on industrial cooperation would be updated on preparation of SEZs. Three to four zones are expected to be taken up in the first phase of implementation, the official added.

China’s small and medium-enterprises (SMEs) are showing interest in the SEZs which is encouraging and will help the early completion of these areas. Under CPEC, China and Pakistan have agreed to establish nine SEZs throughout Pakistan.

Published in Dawn, March 3rd, 2018