Only 30 kilometres from Kahuta, atomic research zone of Pakistan in district Rawalpindi, the construction work on the Karot Hydropower Project by the Chinese engineers is in full swing. The run of the river priority project of China Pakistan Economic Corridor (CPEC) is located on Jhelum River on the border of district Kotli Azad Jammu and Kashmir (AJK) and Rawalpindi district.

The project, with a capacity of 720 Megawatt and 3.249 billion units of electricity per year, costs $1698 million at the moment. One can see heavy machinery and grinding of rocks on the project site while coming down from Kahuta to Kotli. The project includes construction of a concrete-made 91 metres high dam with a crest length of 320 metres and the dam’s reservoir will be approximately 152 million cubic metres in volume, with a length of 27 kilometres.

The Pakistani government aims to execute 15 CPEC-Energy Priority Projects and seven CPEC-Energy Actively Promoted Projects in coming years, according to the Planning Commission. These energy projects, which will meet the persisting challenge of energy shortage in the country, are mostly carried out by Chinese companies on Build-Operate-Transfer (BOT) basis, according to government officials. A week ago, the size of the CPEC has been increased to more than $51.5 billion after China and the Asian Development Bank (ADB) agreed to lend $8 billion to upgrade the main railway line from Karachi to Peshawar, according to a government announcement.

With an impression created by the government that huge Chinese investment is coming in energy sector to help Pakistan, these projects would be completed in different phases. However, people know less about how these projects are hastily planned, quickly awarded and, based on Chinese loans, how costly are they. The lunch is not free at all. The Chinese companies are getting big loans from their banks. The loan, in fact, would be paid by the Pakistani people with interest along with the price of electricity that includes a reasonable profit to that company for a period of 30 years. After 30 years, the projects would be handed over to the Pakistani government. It is becoming a practice now that the government charges electricity consumers extra under different irrelevant heads of government expenditures and taxes.

In addition to this burden, the federal government, recently, also increased the capital cost of these CPEC-related projects to one per cent to meet the security expenses of these projects. This additional cost would be included in the electricity price and collected through bills. A few days ago, the federal government approved one per cent increase in capital cost of the CPEC power projects as "security cost". According to reports, the cost includes establishment of separate forces including a Special Security Division of Pakistan Army.

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The government has decided that the Ministry of Water and Power will ensure that all remaining sponsors of power projects where the financial close has not yet been achieved shall add one per cent of the actual capital cost on account of security for the project. This shall also include the projects under the early harvest where the financial close is still pending, as well as new additions to the projects already under implementation. For the projects which have already come under implementation, Ministry of Water and Power will immediately carry out an exercise in consultation with the Finance Division for increase in tariff through NEPRA for security of the projects for their entire period of operation.

"CPEC is not a free lunch butt a very costly meal. And the discredit goes to negotiators," Khalid Mustafa, a senior economic journalist says, adding, "Undoubtedly, though a badly negotiated plan, the CPEC is beneficial for Pakistani people. It is badly negotiated because the rule of investment is unique here. The profit margin is high. And the state of Pakistan is guaranteeing the investors that they would get 28-30 per cent profit. It is against the foreign investment rules where the whole project will be on loan to be paid by consumers and then profit is also guaranteed." He says there is no surety for the success of these projects as Chinese companies had set up 10,000 MW capacity power plants in Indonesia and almost half of those plants stopped working after a few years.

Pakistan announced the creation of a "Special Security Division" for CPEC after Chinese President Xi Jinping’s visit to Pakistan in 2015.

"Generally, all costs of such projects are met by consumers. But the costs can always be better planned," observes economist Dr Pervez Tahir.

The security component, according to government officials, will not only be included in the cost of CPEC projects but would also be embedded in the cost of the projects out of CPEC initiative. For example, according to reports, the cost of $1.353 billion of 700 kilometre Gawadar-Nawabshah LNG pipeline that is not currently under the CPEC umbrella will also increase by one per cent to meet security expenses. The additional one per cent cost will be charged from the bulk LNG consumers through the LNG tariff. Similarly, the security cost of CPEC roads will be added in toll tax.

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One of the prime reasons of these hastily approved and quickly started projects is political ambition of the ruling Pakistan Muslim League-Nawaz (PML-N) to complete most of the projects before the next elections in 2018. According to officials working on these projects there is immense pressure from the government to meet the task before mid 2018 so that the PML-N could secure its political constituency.

Nandipur Power Project is one such glaring example where, according to a former head of the project, all rules were bypassed to make the project possible at the earliest in the wake of ‘national interest’. The project now has become very costly and is a total failure, according to media reports. This was the pressure of the government that, according to some reports, forced the former chairman WAPDA to resign. Now, a former army general is heading the WAPDA to oversee the expected high pace of the work on power projects, a WAPDA official says, asking anonymity.

"The most important component of the CPEC is its planning, feasibility report and transparency which is missing," Karachi-based economist Kaiser Bengali says, adding, "Till date, the federal government has not conducted any feasibility study of this mega project. No details of the project cost and agreements are shared at all despite demands." He says secrecy is maintained in the name of ‘national interest’ and no data is being released. "There are ad-hoc and new heads of expenditures and increase in costs announced from time to time shows lack of planning and proper budgeting."

"Ultimately, people will have to pay the price through indirect taxes. That is why we demand that there should be transparency and people should have the right to know about the details of the projects and their planning"

Bengali says they are making dams in Gwadar despite the fact there is no water in Gwadar, except for rain water. "How will they fill the reservoirs? Gaddani Power Project is also not economically feasible and no details are being shared about it." He says such projects with secret planning and cost, ultimately, would add to the economic challenges of Pakistan and increase the difficulties of consumers.