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Opinion

October 25, 2016

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CPEC: no squabbles please

The China-Pakistan Economic Corridor has been a most welcome development. As clichés go, this is a game-changer, probably; a gear changer, possibly! The issue with changing gears is that one could just as well decrease speed as increase it. To avoid slowing down, I wish to discuss three components of the CPEC – the highways/motorways, the railways and water storages.

The highest priority in the road sector is, and should remain, the Lahore-Multan-Sukkur-Karachi motorway since it carries the greatest load both for passengers and for freight. The area on the eastern bank of the river Indus comprises 70 percent of the country’s population, 80 percent of the agriculture output, 90 percent of the industry (including Karachi) and nearly 100 percent of the exports. As such no other road section is a substitute for the eastern motorway.

The DI Khan-Zhob-Quetta-Gwadar section is important no doubt and a four-lane highway for the next few years should suffice to its needs after which it could graduate to a motorway. It would take that long for the Gwadar Port to handle the increased freight. The region is mountainous and passes through the Sherani tribal areas, presenting some engineering and other challenges. This road is under construction currently but would require generous funding for quick completion.

There is also the pressing need under the CPEC for widening and improving the Indus highway between Peshawar and Karachi on the right bank of the river as this reduces the distance by nearly 300 kilometres between the north and the port. The construction of the Burhan-DIKhan section leading southwards would be a boon.

These days one hears the demand for establishing industrial estates along the motorways for quick industrialisation. It is important to remember that merely establishing industrial estates near motorways does not result in developing industry. Were that so Kohat, Bannu, Swat and DI Khan would have been industrial hubs by now since estates were set up there 30 years back. One requires incentives like subsidised electricity, lower tax and duty regimes and a secure environment to encourage industrialists to invest. Industry was wooed to Amangarh-Nowshera in the early fifties and to Gadoon-Amazai forty years later, by generous incentives alone. When these were withdrawn or whittled down, industry walked away.

Today, nearly 80 percent of the units established in Gadoon are either closed or have moved out. The governments, both federal and provincial, should provide Khyber Pakhtunkhwa and Balochistan greater financial incentives to bring them a par with the other parts of the country. In the case of KP, the provincial development strategy since long was based on providing the incentive of lower power tariff. This ought to be actualised by quickly completing the hydropower plants initiated by the previous ANP government and building additional larger ones.

For the provincial government to focus on tiny publicity-gaining, micro hydel-power ‘toys plants’ will not help and certainly not with foreign loans of $300 million. It would be advisable for the Asian Development Bank to allocate this amount for larger hydel projects in KP and Fata. The projects selected must be sustainable. Why generate only 35MW with this amount when one could use it as full equity for the Munda-Mohmand dam’s 800MW project? Elementary economics, Dr Watson!

As for the railways, a massive $8.5 billion is being expended under the CPEC for doubling and modernising the Peshawar-Karachi main line. This should reduce travel time by nearly half, benefitting local and foreign commerce. It is now important that the initial feasibility study conducted by Pakistan Railways in 2006 for the rail line from Peshawar to Gwadar be converted into a detailed design and engineering document. This line would truly be an all-Pakistan link as it would traverse Peshawar-Kohat-Bannu-DIKhan-DGKhan-Kashmore-Khuzdar-Pangur-Gwadar. It should be funded through CPEC Phase Two.

We should remember that the Karachi-Lahore railway line was initiated in 1868 and a hundred and fifty years later the western provinces need to be extended this advantage too. The kernel of economic development lies within rails.

This brings me to the third item relating to the development of additional water storages in the country. Two projects rank very high – the Diamir-Bhasha and the Munda-Mohmand dams. The former would store 8.1 million acre feet of water, add 4500MW power capacity and provide revenues of over $4 billion annually even without the economic multiplier factored in. The Munda-Mohmand dam on River Swat in the tribal areas would save Peshawar valley from recurrent floods and generate electric power worth Rs20 billion each year. The return on equity would be over $70 million annually to the state on the latter project.

What could be greater game-changers? Both need to be developed in the public sector with Chinese and the Asian Infrastructure Investment Bank’s assistance. European manufacturers of electric turbines and generators have also offered financing for such equipment, which should be availed because of their superior efficiency and durability. In the meanwhile, every year’s delay adds about half a billion dollars to their total cost.

Fortunately, there is hope. The federal government has allocated the entire amount required for the land acquisition of the Diamir-Bhasha dam while Governor KP Iqbal Jhagra and Wapda both appear keen on constructing the Munda-Mohmand dam. So no squabbles please. To end with another cliché: time is of the essence.

The writer has served as chief secretary of GB, AJK, KP and Sindh.

Email: [email protected]

 

 

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