CPEC’s Impact on Energy Sector

One of the most discussed topics in Pakistan these days is CPEC, a project aimed to become an economic game changer for not only the partner countries, Pakistan and China but also for the whole region. A lot may know of CPEC as only a road for trade purposes but instead, this project is focused on developing multiple infrastructure projects throughout the country. It aims to eradicate the energy crisis of Pakistan which from a long time is one of the major hurdles in the economic growth of the country as from years the shortfall of energy keeps on growing despite multiple efforts made by different governments.

The whole project of CPEC can be roughly divided into three categories which are the transportation networks, energy projects, and creation of trade zones. As far as the energy sector is concerned more than $33 billion worth of projects are planned to be constructed in the country with initial target to fight off the shortfall of roughly 4500MW until the end of 2018 by adding about 10,000MW energy into the grid through a series of developments labelled as “Early Harvest” projects.

There are a total of eight projects in Punjab, four in Sindh, two shared between Punjab and Sindh, two in Balochistan and one in Khyber Pakhtun Khan being constructed under Early Harvest policy. The major sources being considered for long-term development of electricity in the country include hydropower, coal, liquefied natural gas, wind power and solar plants. The projects that are aimed to be constructed will be developed by Independent power producers instead of the governments of the two countries and Pakistan’s government will be contractually obliged to buy electricity from them. The major bank involved in financing the projects is China’s Exim Bank.

Talking about renewable energy projects the aim to become self-sufficient by the end of 2030. The projects that are now finalized and under construction include the Quaid-e-Azam Solar Park near Bahawalpur targeted to produce 1000MW by the end of 2018. Jhimpir Wind Power Plant is selling 56 MW of electricity to the government. A wind farm, the Dawood wind power project is under construction aimed to generate 50 MW. The 870 MW Suki Kinari Hydropower Project in the Kaghan Valley of Khyber Pakhtunkhwa province is being developed. Another dam named Karot Dam is also under construction. One rather dissipating news was that the long-awaited project of Diamer-Bhasha Dam is now officially dropped from bidding which was previously being discussed to be financed by CPEC. However, Kohala Hydropower Project of 1100MW capacity is being constructed. The pro factor of this energy source is that it is environment-friendly free from pollution but the con is that it is not politically friendly as it raises a lot of provincial controversies.

One may think that the core focus is on hydropower but despite being a major environmental concern bulk of new generation under CPEC is coal-based as $5.8 billion worth of projects are being installed and expected to be completed by 2019 as part of “Early Harvest” plans. In Balochistan province, a coal plant of more than a thousand MW capacity is being installed at Hub whereas the heart of CPEC, Gwadar will also have its own coal plant of 300MW capacity. In Punjab near Sahiwal, a project of 1320MW is under construction. A small project of 300MW is also being developed near the town of Pind Dadan Khan. In Punjab, coal power generation is raising a lot of environmental concerns apart from cost problems as coal is transported from Sindh which increases the cost up to 30%. In Sindh, the major projects lie in Thar where natural coal will be used to provide a subtotal of more than 4000MW as different phases of the project complete over the years. As a requirement for electricity distribution from the Thar Projects two lines is to be constructed from Matiari to Lahore and Matiari to Faisalabad. The first reactor completed in 2017 of 660MW capacity the Pakistan Port Qasim Power Project will also serve as a major game changer in the energy crisis due to its increasing capacity over the years.

Gas Projects under CPEC involve using liquefied natural gas as a power source. A $2.5 billion worth 711-kilometer-long gas pipeline from Gwadar to Nawabshah is aimed to be constructed with regional stability. This pipeline is so designed that it can become an extensive part of the 2,7 75 kilometers long Iran–Pakistan gas pipeline. Talking about regional unity through resource distribution, there is another pipeline project named North-South Pipeline being constructed with Russian assistance between Karachi and Lahore.

With so much to be heard about CPEC, these projects seem to finally end our energy crises but keeping in mind the track record of Pakistan’s government the implementation of these projects will be very difficult and nothing should be considered until its done.

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