The following excerpts are from the interview of Ex-Minister CPEC Authority, Khalid Mansoor that took place at Global Village Space Magazine. The interview came about in the context of an earlier discussion by the former Chairman of the Federal Board of Revenue, Shabbar Zaidi. The analysis provides a counter-narrative on certain policies that failed to generate maximum investments in the CPEC projects.
Moreover, Khalid Mansoor provides a detailed account of developments that took place under the CPEC initiative and also addressed the misconception of special concessions given to Chinese investors. Conclusively, it was asserted that China has made huge investments in Pakistan without having any special discounts and favorable policies in the CPEC projects.
Dr. Moeed Pirzada: Are the incentives of CPEC policies specific to Chinese companies?
Khalid Mansoor: CPEC policies are not China-centric. No additional fiscal incentives or concessions were provided to China specifically. Incentives which were available to Chinese investors were also available to other international investors. However, Chinese investors took the lead in investing in special economic zones of CPEC.
Dr. Moeed Pirzada: Has China taken any sovereign guarantees of a 17% return on investment on CPEC projects?
Khalid Mansoor: The return on investment is part of Pakistan’s policy, which was made clear prior to the investments. Moreover, Pakistan has a single buyer market and the sponsors have to make themselves available to the government. Likewise, for a capacity payment sovereign guarantees are necessary.
Dr. Moeed Pirzada: According to APTMA and other exporters, energy costs are more in Pakistan compared to Bangladesh and India, which makes their products less competitive on an international level. To what extent will the Chinese production of energy improve Pakistan’s energy fuel mix and its costs?
Khalid Mansoor: Pakistan’s energy fuel mix was one of the most expensive ones compared to other developing countries as its maximum power generation was based on furnace oil. The country lacked power generation based on indigenous coal. Gradually we have started to construct two kinds of power generation; coal and hydroelectric power generation, which aim to limit the furnace power generation in the country. The 5300-megawatt projects include coal-based, hydroelectric, and wind power plants worth $16 billion.
Additionally, with the collaboration of Chinese EPC contractors and the Habco platform mine capacity was further expanded with four 330-megawatt power projects. These projects contribute the most cost-effective power to the national grid with a fuel cost of just 2.5 rupees per unit, as compared to 35-40 rupees per unit generated from furnace oil. Furthermore, Chinese investments had a very low-interest rate compared to other investors such as Asian Development Bank and IFC.
Dr. Moeed Pirzada: There are 9 special economic zones in Pakistan. Why hasn’t any been taken off as yet?
Khalid Mansoor: There is a misconception regarding the progress and development of special economic zones in Pakistan. There has been the development of the SEZs through various initiatives taken by many SMEs, and the Allama Iqbal SEZ in Faisalabad has shown great progress.
Dr. Moeed Pirzada: How is CPEC a game changer for Pakistan?
Khalid Mansoor: CPEC project is a game changer for Pakistan, as it is a flagship project of OBOR. Gwadar is considered the jewel of the crown; it is a win-win situation for both Pakistan and China. China aims to develop an alternate trade route from the east, the Xinjiang province towards Central Asia and Europe as its economy is largely dependent on trade. In addition to employment opportunities and regional connectivity, an international airport worth 250 million is one of the prospects of the project which would largely boost Pakistan’s economy.