Game Changer & Harbinger of Regional Prosperity through Gawadar port, the timeline for the transportation of this oil to East China, would be reduced to 28 days approximately. The map above shows the current route through which China receives 80% of its energy imports starting from the Persian Gulf to the South China Sea and finally reaching East China. The current route increases transportation and storage costs for China. The Costs are not the only reason why china is trying to find an alternative route. There is political tension between China, Vietnam, Philippines, Malaysia and Brunei on who have control over the Spartley and Paracel islands (Shipping route)
Pakistan and China have entered into an arrangement for economic development and regional connectivity through a three stages plan translated into US $46 billion called China Pakistan Economic Corridor (CPEC). CPEC is a strategic economic partnership to transform Pakistan into a geo-economic hub. The multitude of projects will lift millions out of poverty, providing employment through textile garment, industrial park projects, construction of dams, and installation of nuclear reactors. The networks of highways, railway lines and optic fiber connectivity will surely increase private funding and employment.
Gawadar is the third largest port of the world with a natural depth of over 18 meters and 120 Berths and one of the largest in the region .
A need assessment clearly identified CPEC to be the best option as it reduces the energy time and cost for China.
China export through this port to Middle east and Africa through Malacca reduces from 45 days to less than 10 days approximately .
The corridor would closely connect Central Asia ,West Asia and Gulf states for economic and energy co operation.
Investments by China will approximately double the Pakistan current growth rate thus having a positive impact on the present GDP of USD $275 billion. The corridor for Pakistan would generate more business ,reduce poverty ,create job opportunities and above all provide infrastructure to almost the entire region with an access to warm waters.
The Chinese economy is dependent on imported oil, and has a daily consumption of 10.3 million barrels of oil. With an average cost of US $ 400 million per day.
The Project includes building of highways, railways Optic fiber connectivity and economic zones. It is among the six economic corridors conceived under Chinas Silk Road Economic Belt
One of the significant role in the economic growth is expected through Gawadar Port.
On an average the transportation of oil takes up to 3.5 months. In contrast if the oil imported by China
Fully equipped hospitals, technical and vocational training institutes, water supply and distribution in undeveloped areas will also improve the quality of life of people.
Furthermore, 82% of this import of oil is through China’s coast situated on its Eastern side, as Western China is landlocked.
Benefits of CPEC Energy (G2G) •
In the energy sector, project totaling 10,400 megawatts had been included in the early harvest (first priority) programme, which could be completed by 2018.
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In all, Chinese firms will put up $35 to $37bn in the foreign direct investment for independent power production (IPP)under an investment policy that was available to all investors.
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There have been several agreements that have been signed between Pakistan and China in regards to ease off entry and exit between China and Pakistan
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These projects would be based on wind, solar, coal and hydropower generation of 16,400 MW as well as the transmission system and would be located in all the provinces and Azad Kashmir.
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China will be setting up10 projects of 6,600MW in the Thar Desert that would transform this remote and underdeveloped region into Pakistan’s energy capital and open up economic opportunities for the people
Infrastructure
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After the complementation of this Project, Pakistan will become modernize and then by spreading out markets for manufactured good.
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The areas adjacent to the corridor would become attractive locations for manufacturing, agricultural and services industries, Small and medium enterprises would be special beneficiaries.
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Employment and economic growth expand significantly
Sources of Funding China has assumed the main responsibility for project financing at the initial stage. Regarding some projects with significance to CPEC, feasibility of using multiple channels like government funds from both sides has been analyzed. The Conclusion to this was that the two central banks promote currency swaps and help and maintain Pakistan exchange rate stability. Policy related banks and commercial banks in both countries may conduct strategic cooperation and organize consortium loans without interest or with low interest rates. Based on the preliminary plan, diversified financing methods have been designed according to the nature of the projects in different areas, such as: increased Chinese capital support for Pakistan, including free aid, interest – free loans and preferential loans;
encouraging more Chinese enterprises to invest in Pakistan, including the establishment of industry parks, project contracting, labour export, and equity participation on a stand alone basis or through a strategic collaboration with Pakistani enterprises etc. China on the whole, through the Asian Infrastructure Investment Bank, a multilateral development bank, is intending on investing US $113 billion various regional connectivity to promote economic ties within the region. In a significant development, the United Kingdom has become a partner in China-Pakistan Economic Corridor and agreed to provide $121.6 million in grant to fund construction of BurhanHavelian Expressway, which falls on the northern route of the corridor.
The Asian Development Bank (ADB) and the Department for International Development (DFID) of the United Kingdom will co-finance the $327 million cost of the 59km-long Hassanabdal-Havelian Expressway (E-35) project, according to a handout issued by the Manila-based lending agency on Tuesday. Two separate funding bodies have been set up. One consists of money invested by the Chinese government which will contract out only to Chinese companies from the private sector. Similarly, the second fund consists of funds allocated by the Pakistan Government body which will only employ contractors that have a minimum of 60% Pakistani ownership.
