Is Pakistan overselling CPEC?

[Imad.Khan]

Ignoring Indians and their concerns, i also have many questions which i am unable to find the answers. I will list what i know so far and the questions i have below

What i know

1. Roads, railway tracks and pipeline will be made connecting Kashgar to Gwadar. Pakistan will collect toll fees through it
2. Power plants and Dams are being built which will provide much needed electricity. Due to the electrical power shortage Pakistani industries have been suffering.
3. Schools are being built around Gwadar which had little or not infrastructure before.
4. Gwadar Port is being managed by China

My Questions

1. The money spent by China for the roads and railway lines, if it is a loan then what interest rate is it on? If it is an investment by China, how much of the profit will go to them?
2. Same thing with the power plants, if it is a loan what is the interest rate, if its an investment then what is the profit sharing agreement?
3. What is the agreement for the port management? Is Pakistan paying China to manage it? How does Pakistan intend to make money from the port.
4. How is Pakistan going to insure that the local people are hired in significant numbers
5. Basically i want full transparency of the agreements in relations to the deal with China, no secrecy?
6. What is the cost of maintaining the roads and the security both on land and on the seas.

 

[Kabira]

Ignoring Indians and their concerns, i also have many questions which i am unable to find the answers. I will list what i know so far and the questions i have below

What i know

1. Roads, railway tracks and pipeline will be made connecting Kashgar to Gwadar. Pakistan will collect toll fees through it
2. Power plants and Dams are being built which will provide much needed electricity. Due to the electrical power shortage Pakistani industries have been suffering.
3. Schools are being built around Gwadar which had little or not infrastructure before.
4. Gwadar Port is being managed by China

My Questions

1. The money spent by China for the roads and railway lines, if it is a loan then what interest rate is it on? If it is an investment by China, how much of the profit will go to them?
2. Same thing with the power plants, if it is a loan what is the interest rate, if its an investment then what is the profit sharing agreement?
3. What is the agreement for the port management? Is Pakistan paying China to manage it? How does Pakistan intend to make money from the port.
4. How is Pakistan going to insure that the local people are hired in significant numbers
5. Basically i want full transparency of the agreements in relations to the deal with China, no secrecy?
6. What is the cost of maintaining the roads and the security both on land and on the seas.

As far as I know but could be wrong.

1. Loan interest rate is 1 or 2% to be payed over 25-30 years. So far it include ML-1 $8b and some sections of motorway etc
2. Power plants are not loan but IPP. They will directly sell electricity to Pakistan government and get payed. How Abid Sher Ali recover bill amount from consumers isn't China problem. So it's up to Pakistan to take care of losses.
3. Pakistan have handed over port to China for 40 years in return they will develop it themselves etc
4. Already you can see that most of people are locals in projects, ratio was 60-40% if I'm not wrong.
6. Cost of security provided to Chinese is 1% of whole CPEC project amount.

 

[Imad.Khan]

As far as I know but could be wrong.

1. Loan interest rate is 1 or 2% to be payed over 25-30 years. So far it include ML-1 $8b and some sections of motorway etc
2. Power plants are not loan but IPP. They will directly sell electricity to Pakistan government and get payed. How Abid Sher Ali recover bill amount from consumers isn't China problem. So it's up to Pakistan to take care of losses.
3. Pakistan have handed over port to China for 40 years in return they will develop it themselves etc
4. Already you can see that most of people are locals in projects, ratio was 60-40% if I'm not wrong.
6. Cost of security provided to Chinese is 1% of whole CPEC project amount.

Sounds good but what is your source for these numbers?

 

[Kabira]

Sounds good but what is your source for these numbers?

From many articles and tv interviews. Pakistan need to worry about how to reduce line losses once all these power plants come online. Because otherwise circular debt may increase even more quickly and Pakistan state will have to pay Chinese companies who have build plants no matter what.

 

[Imad.Khan]

From many articles and tv interviews. Pakistan need to worry about how to reduce line losses once all these power plants come online. Because otherwise circular debt may increase even more quickly and Pakistan state will have to pay Chinese companies who have build plants no matter what.

I have read those articles aswell but majority of them are speculations or just reporting what Ahsan Iqbal is saying. No one has actually seen anything in writing yet

 

[vikata]

Pakistani media had been taking up all kinds of aspects of CPEC for discussion and criticism long before CPEC was started. Pakistanis are not blind followers be sure we are very hard nuts ourrselves specially our media who try to find bones in a muscle so obviously nobody is going to get away with everything so easily.

NOw what you have stated in your comment well that is an ideal scenario for Indian hate for Pakistan so why so many Indians are more worried for Pakistan than Pakistanis themselves ?

There must be something that is worrisome for India in CPEC that is why so much fondness for Pakistanis. You may explain or shed some light what is bad for India if CPEC completes and deprives Pakistan of everything?

of course a prosperous ,stable and democratic pakistan is ideal for the region
its not the hatred for pakistan
it was more out of curiosity that i put my point of view rather than any bias
although i find funny that on every aspect its the typical response of many a members here that all problem will be sorted out after cpec
which i accept we too do on a number of topic
on topic
my point was simple pakistan is dangerously begin to dependent on china for almost all its need which is neither good for pakistan nor the region
if tomorrow your path diverge how will u be able to come out
just like india too was /is crucially dependent on russia for defense

i hope u will shed some light

 

[Kabira]

I have read those articles aswell but majority of them are speculations or just reporting what Ahsan Iqbal is saying. No one has actually seen anything in writing yet

I don't know if they will release actual contract. All we get is price per unit Pakistan will pay to Chinese companies. And the fact that Pakistan have to buy electricity from them no matter what.

Problems will start once Pakistan couldn't pay them for what ever reasons like line losses, circular debt etc In that case sovereign guarantee will help Chinese companies recover money. There is another clause about guaranteed profit/return, but that's given as long as Pakistan keep buying electricity from them.

 

[mdcp]

I dont get it.
Chinese are building roads under cpec, and pakistanis are dreaming of taxing and tolling the same road to be used by chinese people ?
Is that possible, so who is getting fooled here ?

Chinese financed it and they will get all money back with interests and also keep in mind china is not working to benefit Pakistan and they are making cpec to benefit China. Chinese firms constructing these projects and obviously they will make profit where as we will get infrastructure and experience.

We need to focus on give and take and must ensure our sovereignty and prosperity. From political and economical point of view cpec is great and we need to ensure maximum benefit for our people.

Solely rely on toll taxes is stupidity, we need to focus on intra trade and manufacturing and job opportunities for Pakistanis in cpec.

If our priorities are not set properly and money is not used to benefit our own economy than we will be in trouble when we have to pay back these loans. So we need to spend carefully and spend on those projects which benefits us most.

 

[t_for_talli]

No, I don't think that is incorrect.

There are two sides to every story. For the profit that China is making, and the debt that Pakistan is taking on, Pakistan gets a world-class infrastructure base.

For the local steel/cement industries that suffer, Pakistan gets extremely cheap steel and cement from China's excess capacity that has nowhere else to go. High quality at rock bottom prices.

For the large amounts of additional political/diplomatic influence that China will gain from Pakistan's current/future decision makers, Pakistan will also gain influence and leverage over China.

The important point to take away from this, is that China was once in the same position that Pakistan is in. When China opened our markets to the world, people were afraid that we would be flooded with foreign goods and businesses. And yes, that did happen.

All the things we can make now, we couldn't make them even a few years ago, back then we had to import nearly everything. Including the vital capital machinery needed to manufacture things in the first place.

China saw it as an opportunity, not a curse. It took decades but now we are on the other side of the playing field, this is achievable for Pakistan as well, given a good enough leadership.

The bottom line is that China cannot change Pakistan's destiny, only Pakistan can do that. What China is offering is a big business opportunity, which Pakistan can grab with both hands (like China did once), turn away and find another alternative, or use it as a crutch to become a welfare/benefits nation that just sits around and doesn't do anything. That's their own decision to make.

A lot can be said , may be possible or might be huge opportunity.

But the fact is China is not doing charity. We have seen it before in Sri Lanka / Tazikistan. The way CPEC will come out will definitely secure Chinese interests (profits)

Now for Pakistan its debt and world class infrastructure. It all depends on how Pakistan as a nation can churn that infrastructure development in her favor. It will work if Pak is able to generate benefits greater than debt due to CPEC.

However, history tells us (Sri Lanka/ Tazikistan) that its only one party (CHINA) which benefits and second party ends up in debt trap.

 

[Stuttgart001]

Chinese financed it will will get all money back with interests and also keep in mind china is not working to benefit Pakistan and they are making cpec to benefit China.

We need to focus on give and take and must ensure our sovereignty and prosperity and from political and economical point of view cpec is great and we need to ensure maximum benefit for our people

Dude,Pakistan should not keep the eyes on the tolling and taxing the road and rail which is indeed profitable, but nothing compared to the development of industries spured by the immense program.
Let us speculate what's gonna happen in a logical way.
Firstly, China invest hugely in the infrastructure and Chinese companies will go into Paskitan with money and technology.

Secondly, Chinese companies need to employ Pakistan people and train them with working skills and knowledge.

Thirdly, the infrastructure construction will create hugely vast demand of steel , material ，construction machinery and electric equipment ..etc. So these related industries would be developed in Pakistan .At first, there are joint ventures in a cooperational model of Chinese capital and technique plus Pakistan land and labor.

Fourthly, during the process of development, lots of ordinary Pakistan would get paid and live a better life .Furthermore, there are a number of smart ，adventurous and hard-working Pakistan would grap these opportunity and establish their own corperations and become business elite.

Fifthly, Pakistan government will get payment economically by taxing either Chinese companies ,or joint ventures or Pakistan companies ,plus the income of Paksitan rich people. The more Pakistan government's revenue is , the more the budget is. No doubt there are more investment in education from Pakistan government.
Pakistan people would get better education . The more education Pakistan get, the more competitive the Pakistan manpower resources.

Political income of Pakistan government which might be the last thing indian would like to see is the Karshmir is going to be grabed by Pakistan forever and Pakistan is going to be a industrialized nation.

To those people who question if Pakistan could benefit from the CPEC project, I just want to ask
Do you guys ever see what Vietnamese have achieved in the recent years ?
Do anyone think Pakistan people are inferior than Vietnamese ?
If not, why Pakistan could not make greater achievement with full help of China ?

A lot can be said , may be possible or might be huge opportunity.

But the fact is China is not doing charity. We have seen it before in Sri Lanka / Tazikistan. The way CPEC will come out will definitely secure Chinese interests (profits)

Now for Pakistan its debt and world class infrastructure. It all depends on how Pakistan as a nation can churn that infrastructure development in her favor. It will work if Pak is able to generate benefits greater than debt due to CPEC.

However, history tells us (Sri Lanka/ Tazikistan) that its only one party (CHINA) which benefits and second party ends up in debt trap.

Do you ever study the real situation of Sri Lanka/ Tazikistan ? It is ridiculous to say China benefit from the Sri Lanka /Tazikistan programme.

 

[POPEYE-Sailor]

Here is the best answer why china investing

 

[Fledgingwings]

last 70 years ...Pakistan made roads only....now they got more roads in the name of CPEC

Pakistan has also made some round things which fit where it hurts the most.Only waiting for a Mighty neighbour give us the green light.

Eversince this project is started there is only one country feeling the BAD ITCH where its people have overgrown some hair,a place highly unlikely.I know rest of the members shall easily spot those people.they re very fond of making movies and doing this

 

[dray]

So what does China gain out of its investments in developing infrastructure in developing countries? After all, China must be doing this investment to serve its own national interests, not that of the developing countries.

Three things mainly.

The first is finding an outlet for China's industrial overcapacity, for example in steel and cement. The second of course, is the age old reason of profit. The third reason is to gain additional diplomatic favor with the decision makers in the Pakistani government, both present and future.

In my opinion.

Good to see an honest reply. I always considered the whole OBOR project is much more about infrastructure business for China to utilize its overcapacity leading to NPA, than a genuine trade route. Maritime routes will remain the most preferred transport medium for foreign trade due to its huge cost benefits over road transport.

Btw, for your last point; I would prefer to use the term 'influence' over 'favor'.

 

[Chhatrapati]

According to bhartis, CPEC is a failure and will bankrupt Pakistan in three years, you should celebrate if we are over selling it, why worry?

AAG HAI KAY BHUJTI NAHI HAI
ZABAN HAMARI RUKTI NAHI HAI
BUND HAMARI SULGI HUI HAI
Thread PEH Thread BANAY JAINGAY
JHOOT APNA BARHATAY JAIN GAY

I think you should ban Dawn for making false accusations. The report is from Dawn.

Hahaha Indian obsession with CPEC is really now at astronomical levels. Even if we are over selling and will gain peanuts, is it a concern for Indians ? Look the way they choose picky topics from media about CPEC is really obvious how much jealous they are about it.

So dear bhartis, tumharay Abba gee ka eik paise nahi lug raha project mein so jo kuch be hoga woh humhey handle kerna hai good or bad so stop thinking about cpec please no matter how hard it is for any random Bharti.

If you think CPEC would catapult you guys into one of the worlds largest economy, then good luck with that.

 

[武成王]

Ignoring Indians and their concerns, i also have many questions which i am unable to find the answers. I will list what i know so far and the questions i have below

What i know

1. Roads, railway tracks and pipeline will be made connecting Kashgar to Gwadar. Pakistan will collect toll fees through it
2. Power plants and Dams are being built which will provide much needed electricity. Due to the electrical power shortage Pakistani industries have been suffering.
3. Schools are being built around Gwadar which had little or not infrastructure before.
4. Gwadar Port is being managed by China

My Questions

1. The money spent by China for the roads and railway lines, if it is a loan then what interest rate is it on? If it is an investment by China, how much of the profit will go to them?
2. Same thing with the power plants, if it is a loan what is the interest rate, if its an investment then what is the profit sharing agreement?
3. What is the agreement for the port management? Is Pakistan paying China to manage it? How does Pakistan intend to make money from the port.
4. How is Pakistan going to insure that the local people are hired in significant numbers
5. Basically i want full transparency of the agreements in relations to the deal with China, no secrecy?
6. What is the cost of maintaining the roads and the security both on land and on the seas.

1, The envisaged oil and gas pipeline to Kashgar MAY NOT exist due to extremely harsh geographical environment. It fully depends on technical feasibility and affordable cost.
You can read my previous post to have a clue.
https://defence.pk/pdf/threads/chin...gest-diplomatic-event-of.494750/#post-9466563

3, That's too pessimistic to expect to earning ONLY lease fee from Gwadar Port, the primary functionality of Gwadar Port is its facility to help boost economy development of Baluchistan, e.g. mining industry, fruit agriculture, oil refined and chemical industry etc, you may find nothing there currently, I bet you will see the announcement and construction in future.

The whole point of CPEC is not "Chinese earn big money from Pakistan", I know you may not believe my CRAP, Chinese are portrayed as money orientated, however you can think of the JF-17 fighter plane project and tank factory, if China intend to earn money, we won't help Pakistan to establish these facilities. China REALLY does not need earn money from Pakistan. Most money are financed by China stated own firms and low interest below market rate and long term, ask yourself a question: if you have 100 B $, would you dare pour the money into Pakistan to EARN BIG MOENY HERE？Sorry, I'm a little bit rude, however I does hope to make you feel a little bit secure about this project. My suggestion is, people should focus on how to leverage the opportunity to get a good job or start your own business to help Pakistan.

The SUSTAINABLE stability and prosperity of Pakistan is the final goal of CPEC, it's a strategic project not as economic profit driven as private investors.