Thursday, October 7, 2021

Is CPEC Development Focus Shifting From Gwadar to Karachi?

China has agreed to invest $3.5 billion in Karachi, according to Pakistani and Chinese officials. In a separate announcement earlier, Saudi Arabia said it is moving its planned $10 billion petrochemical complex from Gwadar to Karachi.  These announcements have triggered speculation that the focus of development of China Pakistan Economic Corridor (CPEC) is moving from Gwadar to Karachi. 

Karachi Port, Pakistan

The Karachi project dubbed "Karachi Coastal Comprehensive Development Zone project" or KCCDZ    includes additional new berths to Karachi port, development of a new fisheries port and a 640-hectare special economic zone near the port. The project also envisages building a harbor bridge connecting the port with the nearby Manora islands, according to Nikkei Asia

Saudi decision to shift the $10 billion petrochemical plant from Gwadar to Karachi was triggered by the fact that there is no oil pipeline nor a rail line planned to support it at Gwadar. Karachi already has well-developed roads, rails, telecommunications and pipeline infrastructure for connectivity with the rest of the country. 

Gwadar East Bay Expressway, Pakistan

China already has a lot invested in Gwadar.  Krzysztof Iwanek, head of the Asia Research Center at Warsaw's War Studies University, told Nikkei that the challenges of developing a major port in an underdeveloped area like Gwadar must have been factored in by China from the outset. "[I]t may be assumed that Chinese involvement in Gwadar may be at least partially strategic. Karachi, in turn, is Pakistan's most important port, and, hence, Chinese involvement there may be of purely economic nature," Iwanek said.

My own view is that Gwadar remains very important to China for strategic reasons. Gwadar sits very close to the strategic Strait of Hormuz that is used by tankers carrying the bulk of China's and the world's energy imports.  Karachi is the fastest and most economical route to making CPEC operational but it does not diminish the long-term importance of Gwadar for China. 

Related Links:

Haq's Musings

South Asia Investor Review

Pakistanis Happier Than Neighbors

Quaid-e-Azam Mohammad Ali Jinnah's Vision

Karachi Safety Ranking Rising

Gangs of Karachi

Gangster Politicians of Karachi

Karachi is World's Fastest Growing Megacity

Karachi's Human Development Index

Pakistan Rising or Failing: Reality vs Perception

Pakistan's Trillion Dollar Economy Among top 25

CPEC Myths and Facts

Gwadar Port

Riaz Haq's Youtube Channel

PakAlumni Social Network


Shams N. said...

Fat chance. China will likely sink with Punjabistan, and it knows that. Hence Chinese $400 Billion hedge in Iran and the Chabahar seaport.

Riaz Haq said...

Shams: "Hence Chinese $400 Billion hedge in Iran and the Chabahar seaport"

China's $400 billion investment in Iran is a myth.

 First off, nowhere in the text of this or any other official document or pronouncement is any numerical figure mentioned. There are also no provisions whatsoever for the sale of islands, military bases, occupation, or anything that would sustain the other alarmist claims. This has been thoroughly debunked by multiple scholars, and a quick glance at the text will confirm their claims. While the draft itself appears to be genuine, the claims of $400 billion of Chinese investment and massive military concessions can be traced to a poorly sourced Petroleum Economy article from 2019, which has since been taken offline.
Get briefed on the story of the week, and developing stories to watch across the Asia-Pacific.Chinese Foreign Ministry spokesperson Zhao Lijian said the day after that the China-Iran Strategic Comprehensive Agreement “neither includes any quantitative, specific contracts and goals nor targets any third party, and will provide a general framework for China-Iran cooperation going forward.”

Ahmed said...

Dear Sir Riaz

Karachi is already mashallah developed and it is a commercial center of Pakistan. All I think we need to focus is on the improvement and uplifting of the departments and sectors of Karachi which are performing poorly.

If all these development projects of CPEC will be shifted to Karachi toh phir ap sochey Allah na karey wohi masla start hosakta hai Balochistan ka jo pehlay start hoa thah.

Pls try to understand this


Z Basha said...

This is double bonanza with both Gwadar and Karachi included in CPEC. China already runs the stock market and power plants in Karachi. With this good news Pakistan should not rest of laurels and try attracting China to other cities as well.

Riaz Haq said...

Z: "China already runs the stock market and power plants in Karachi."

China has invested in the Karachi stock market or the Port Qasim power plant. China does not run these. Both are operated by Pakistanis.

Riaz Haq said...

Ahmed: "If all these development projects of CPEC will be shifted to Karachi toh phir ap sochey Allah na karey wohi masla start hosakta hai Balochistan ka jo pehlay start hoa thah."

NO, not all projects are being shifted from Gwadar to Karachi. Major infrastructure projects are underway...examples: major new $256 million international airport, $168 million East Bay Expressway and a large Special Economic Zone (SEZ).

A new $10 million China Pakistan Technical Institute has just been completed in Gwadar.

Z Basha said...

It is not necessarily a bad thing that China runs stock exchange. We can learn a few things from them.
4-shareholder directors from China and 3-from Pakistan. This is the future we must get used to.

Independent directors are just honorary and insiders know who is pulling the strings. CEO is a paid position and will keep the owners interest protected.

Riaz Haq said...

Thar Energy’s 330MW Thar Coal-based project nears completion under CPEC
The plant will supply electricity to the national grid

In Sindh, the 330-megawatt Thar Energy Limited Power Project Block-II is being completed under China-Pakistan Economic Corridor or CPEC.

According to an official, the power plant would supply electricity to the national grid under a 30-year power purchase agreement.

According to APP news agency, the power plant is a 330MW mine-mouth lignite-fired power project being built by Thar Energy, which is owned by the Hub Power Company or Hubco, China Machinery Engineering Corporation or CMEC and Fauji Fertilizer Company or FFC.

Similarly, two more coal-fired power plants, Engro Thar Block II power plant and Thal Nova, are also being developed in Thar Block II.

Engro’s Thar Block II power plant is a coal-fired power station in Sindh’s Tharparkar district. It was Pakistan’s first power plant to use the indigenous coal reserves of Thar.

The 660MW power plant, which was part of CPEC, was developed by Engro Powergen Thar or EPTL, a joint venture of Engro Powergen or EPL, CMEC, Habib Bank, and Liberty Mills. Construction on the Engro Thar Block II power plant commenced in April 2016. Trial operations at the plant began in July 2018 while commercial operations began in July 2019.

The coal-fired power plant is located five kilometres away from Thar Block II near Thar coalfields. It consists of two 330MW units, which integrated circulating fluidised bed or CFB boilers, tandem compound steam turbine units, and generators. CFB is an ideal option for the low-calorific-value Thar lignite coal.

It helped to regulate the plant’s environmental footprint by reducing nitrogen oxide emissions and capturing sulphur oxides. The 20kV, 50Hz, three-phase intercooled generators featured a hydrogen-cooled rotor and stator core, as well as water-cooled rotor windings.

The power plant is also equipped with associated equipment and systems such as cyclones, air pre-heaters, and water walls. Sindh Engro Coal Mining Company or SECMC supplied nearly 3.8 million tons per annum of coal for the coal-fired power plant from a new opencast mine.

The SECMC is a joint venture by the government of Sindh and Engro Powergen. The joint venture was formed for extracting coal available at the seventh biggest coal mine site in the Thar Desert.

The new coal-fired power plant fed electricity to a 500kV double-circuit transmission line of the grid network between Thar and the Hesco grid station in Jamshoro. The estimated cost of the Engro Thar power plant was $995.4 million – funded by a syndicate led by China Development Bank with the support from China Export and Credit Insurance Corporation.

The syndicate included Habib Bank, United Bank, Bank Alfalah, National Bank Pakistan, Faysal Bank, Construction Bank of China, and Industrial and Commercial Bank of China.

ThalNova is a similar 330MW power plant being developed in the same block. The financial closing for the power plant was achieved in September 2020 and the commercial operations are scheduled to begin in 2022.

samir sardana said...

Coal prices have increased by 300% in 6 months and will rise more !

In this time, Pakistan has Thar !

The entire US/EU supply chain is busted !

CPEC is about to be commissioned !

Pakistan has Coal AND Lignite ! dindooohindoo

And then there is Reko Copper - when Copper and Alumunium smelters,will close down !

Is it magic or is Allah sending a message to the Pakistanis ?

Riaz Haq said...

#Pakistan minister Ali Zaidi denies #Chinese economic corridor (#cpec) projects shifting from #Gwadar to #Karachi amid worsening security. “Rather, the corridor project is moving into Karachi in addition to Gwadar and is expanding its framework”

A top Pakistani official has said that a proposed $3.5 billion coastal development project in the port city of Karachi is part of the China-Pakistan Economic Corridor, denying that the focus of the multibillion-dollar project was being shifted from Gwadar to Karachi.

Gwadar, in the southwestern province of Balochistan, is the crown jewel of China’s more than $60 billion CPEC investment in Belt and Road Initiative projects in Pakistan. The plan was to turn Gwadar into a trans-shipment hub and megaport to be built alongside special economic zones from which export-focused industries would ship goods worldwide. A web of energy pipelines, roads and rail links would connect Gwadar to China’s western regions.

However, growing insecurity and a rise in attacks by militants in Balochistan has rattled China, which has publicly demanded that Pakistan improve security for Chinese workers. Nine Chinese were killed this year in northwest Pakistan in an attack on a bus carrying them to a construction site. In a separate attack, a convoy of Chinese officials was targeted by a suicide bomber in Gwadar.

Thus, the announcement last month by Pakistan and China to include the Karachi Coastal Comprehensive Development Zone in the CPEC framework unleashed frantic speculation that the corridor project was being moved from the deep-sea port in the volatile Balochistan province.

“CPEC is not moving from Gwadar to Karachi,” Syed Ali Zaidi, the country’s maritime minister, told Arab News in an exclusive interview on Monday. “Rather, the corridor project is moving into Karachi in addition to Gwadar and is expanding its framework, which is great for us.”

“It (CPEC) is going to develop a whole new district in Karachi, which is going to be a state-of-the-art district equipped with technology and all modern infrastructure,” he said.

Elaborating on the financing plan for the project, he said that the $3.5 billion Chinese investment was not a loan or a grant, but the project was a partnership between a Chinese state-owned enterprise and the Karachi Port Trust, which owned the land.

“$3.5 billion will be invested to develop infrastructure where the KPT and (the Chinese) investor both will make money,” Zaidi said. “Instead of a loan or a grant, we have decided to do a win-win project, which means that people who are investing will also make some returns.”

The maritime minister said that the project would add four more berths to the targeted coastal area, providing greater depth to Pakistan’s expanding maritime sector and creating space for cruise ships to dock.

“We will build four berths maybe for cruise ships, and if we build for cruise ships there may be some hotels around it and this all has to be backed by real estate development,” he said. “But the real estate development is not the primary objective; the primary objective (is) to fix our marine environment and, on the top of it, build state-of-the-art modern infrastructure.”

A state-of-the-art fishing port would also be built, Zaidi said, along with a world-class fisheries export processing zone.

“A water treatment plant at the mouth of Lyari River would be built to improve marine ecosystem and reduce pollution in the Arabian Sea,” the minister said.

Zaidi said that the coastal development plan would also benefit the poor slum of Machar Colony in the area, mostly inhabited by the Bengali and Burmese communities: “We have decided to make 20,000 to 25,000 apartments in accordance with Prime Minister Imran Khan’s vision to promote low-cost housing to give respectable living (conditions) to our people.”