Pakistan government set aside speculations of revising CPEC projects, and set aside the claims that the project will add to Pakistan’s debt or have military purpose. Government’s claim of review, it emerged, had pertained mostly to including Balochistan. Yet, lawmakers and key officials from that province, including in the government, continue to protest at being ignored from decision-making corridors, most recently with the reported interest of Saudi Arabia’s potential investment in Balochistan. CPEC is already at the crosshair of some insurgents.
These were the major findings of the quarterly monitoring report on CPEC, covering October to December 2018. Some salient ones are summarized below:
Debate on the direction of CPEC
There have been some media speculations about the direction CPEC will take. Three broad issues to emerge along with their rebuttals are as follows:
First, it was said the new government, which came into power in August 2018, might be revising CPEC projects. These came amid reports of Pakistan renegotiating CPEC and some official gestures and statements. But the government set aside such reports, ensuring cooperation on CPEC. The plan, it said, simply was to address the reservations of Balochistan’s due share in CPEC.
Second, it is being said that the entire Belt and Road Initiative (BRI) has military purpose too, especially under CPEC. The New York Times reported that while “Chinese officials have repeatedly said the Belt and Road is purely an economic project with peaceful intent”, “its plan for Pakistan” shows its “military ambitions.”Both China and Pakistan, however, rejected the report.
Third,worries that CPEC will add into debt burden of Pakistan continued. Fetch, a credit rating agency,project Pakistan’s high external debt in next 10 years due to CPEC linked outflows yet to start in year 2020.Similarly, chief economist of the International Monetary Fund (IMF) cautioned Pakistan, while hinted at the benefits of infrastructure under CPEC, cautioned about the external debt falling too.Some media reports claimed Pakistan holds $40 billion debt repayments to China on a $26.5 billion investment of CPEC. Again, both China and Pakistan denied such reports. Ministry of Planning, Development, and Reforms made it clear that Pakistan will repay $7.457 billion, including the interest of $1.422 billion, in next 20-25 years (not the $40 billion figure).
Balochistan in CPEC
One of the issues refusing to die down is unequal distribution of projects in Pakistan.In particular, the one from Balochistan continues to reverberate every now and then. Ever since CPEC was announced, parties and lawmakers from that province have asked questions about their share in the project, in particular whether their province is covered under any route at all. More recently, they have asked for the details of different projects, especially of Saudi Arabia, a willing investor in Balochistan.
Mainstream parties had also sympathized with the demands of Balochistan parties. Pakistan Tehreek-e-Insaf (PTI), which formed the new government, had, in its 2018 manifesto, ensured development of Balochistan under CPEC.
Even Chief Minister Balochistan and his party Balochistan Awami Party, which otherwise is seen as rival of the nationalists, criticized federal government for misleading them regarding due share. The CPEC cell in Balochistan noted zero progress on western route. Balochistan Assembly, which includes members from all parties, criticized the central government of depriving of its due share in CPEC, saying the share was not even ensured in JCC meeting. They suggested forming a national commission including two representative of each province, to check the unequal distribution of CPEC projects.
Those on the fringe are the rebels who have overtly warned government of consequences for ignoring their rights.
Recent reports point to the inclusion ofthird party in CPEC. That player is Saudi Arabia, and some of the areas it is seeking to invest are in Balochistan. As these reports emerged, opposition criticized federal government once, saying local leadership should be taken on board on any project in the province.
8th Joint Cooperation Committee (JCC)
The 8th Joint Cooperation Committee (JCC) on CPECheld in December. It was likely to solve few serious issues including construction of western route under CPEC, implementation of Karachi Circular Railways (KCR), Keti Bandar, and Dhabeji Economic Zone in Sindh,due share of Balochistan, and establishment of a JWG for the third party involvement in CPEC.
In the meeting, Pakistan and China agreed to expand industrial cooperation and attract investment for development of Special Economic Zones (SEZs) under CPEC. Both sides held 1st meeting of the Joint Working Group Committee (JWC) on socio-economic development and underlined six (6) areas for further cooperation including vocational trainings, education, agriculture, healthcare, poverty alleviation, and water supply. JCC ensured development of SEZs in GB and earmarked $1 billion for the social development of Balochistan.
Government could not even satisfy grievances of local people and CPEC investors. A three months long fishermen’s protest against the construction of East-Bay Expressway, disrupting their business in Gwadar, continued.It could not establish the revolving fund of Rs22 billion to ensure payment to Chinese investors of CPEC power projects. Chinese investors are also concerned over delayed payments and warned of holding further investment in power sector. Payments to Orange Line Metro project stakeholders have been delayeddue to its revised cost.
However, both sides are keen towards human resource development under CPEC. Pakistan government is likely to formulate labour policy to improve the workforces’ standard and produce “demand-driven workforce”. In Punjab, it has been working on capacity building of domestic people in south Punjab region to enable them to benefit under the 2nd phase of CPEC. China has even ensured employment opportunities for minorities under CPEC.
The inclusion of Saudi Arabia as third party in CPEC led to speculations about their exact role. Later, the central government clarified that it (KSA) is neither a strategic third partner of CPEC nor it shall enjoy the preferential treatment.Like any other third country, the government said, it will not be included in institutional framework of CPEC, such as Joint Working Groups (JWG) or Joint Cooperation Committee (JCC). 
Pace of CPEC projects
The Embassy of People’s Republic of China in Pakistan shared the progress of projects: “Out of 22 projects of $18.9 billion, total 11 projects have been completed, creating 75,000 direct jobs opportunities for locals, while, 22 more projects are in pipeline.”Below are some salient details:
- Of the 15 energy projects, 7 are completed and 6 are under construction. One project the Thar-based 660MW coal power plant will be operational by January 2019 ahead of its scheduled time.
- Government has brought down Main Land (ML-1) up gradation budget from $8.2 to $6.2 billion and tends to further bring it to $4.2 billion.
- The government is yet to make a final decision on how to finance the Karachi Circular Railway, reportedly a CPEC project.
- KP Planning and Development department found irregularities in a report of two SEZs in Hattar and Rashakai, provided by Economic Zones Development and Management Company (KPEZDMC) to the Board of Investment and Special Economic Zone Secretariat. The planning department further urged KPEZDMX to review inconsistencies to which company has not responded yet.
- Meanwhile, CPEC cell in Balochistan noted zero progress on the CPEC western route. IT also noted that out of $5.5 billion allocated for the province under CPEC, less than $1bn has been spent.
Although the suicide attack on consulate was foiled by security forces, it triggered debate about varying nature and tactics of the attack.
Meanwhile, Sindh apex committee informed that the special branch conducted a security audit of CPEC projects. The audit noted lack of “security equipment and security enablers” at different projects camps and suggested management to overcome these deficiencies.
China offered Punjab Special Protection Unit (SPU) officer training in China, and provided to GB administration 50 motorbikes and 200 bulletproof jackets to GB administration. Pakistan government also took various initiatives to enhance the security of CPEC motorway projects.
Pakistan invited Turkey and Russia to join CPEC. Meanwhile, Tajikistan, UK, and Iran expressed their willingness to join CPEC. Iran’s willingness in some ways set aside reports that Saudi involvement will anger Iran. Meanwhile, India continued to allege CPEC execution against their sovereignty and opposed it.
Click here to download: CPEC Quarterly Report: October-December 2018