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Budgetary allocations for CPEC

The federal government in the budget for fiscal year 2017-18 has allocated Rs180 billion for China Pakistan Economic Corridor (CPEC). Rs231 billion have already been spent on this mega project since the past three years. Rs160 billion would be spent on the construction of streets and bridges under the project. The federal government has also set Rs44 billion for the Western route of CPEC. Rs1.8 billion have been allocated for the security of the economic corridor.

Over a quarter (Rs86 billion) of the total proposed expenditure in the Balochistan budget for fiscal year 2017-18 will be spent on the development of social and economic infrastructure to ‘reap the benefits of the CPEC’. The budget has allocated significant but unspecified funds for completing CPEC-related projects in the province.

Federal government will be spending Rs30 billion for Multan-Sukkur section of Lahore to Karachi Motorway whereas Rs38 billion has been set aside for Hakla Yark-Dera Ismail Khan Motorway. The government is spending Rs1.5 billion on the construction of Bismah-Khuzdar Road whereas Rs54.4 billion will be spent on Lahore Abdul Hakeem Section. The government is allocating Rs25.2 billion on Thakot-Havelian section. Rs3 billion have been set aside for the Burhan-Haveian Expressway. The government has only allocated Rs1 billion for the construction of Gwadar airport. The authorities had demanded Rs 21.2 billion for the project. Rs1.5 billion have been allocated for the Gwadar East Bay Expressway whereas Rs10.6 billion have been set aside for the construction for the Havelian Dry Port. Rs4.2 billion will be allocated by the government for Matiari Transmission Line under CPEC.

The CPEC has the potential to usher in a new era of economic progress and prosperity for both countries benefiting the whole region as well. The project is expected to be ‘a game changer’ not only for Pakistan and China but also for the whole region. Work on $47 billion CPEC is currently underway. The port is essential part of CPEC, which involves construction of highways, railways and energy pipelines connecting western China with Pakistan and the Persian Gulf. The two countries signed 51 deals worth billions of dollars mostly relating to the CPEC project. After construction of the proposed rail, road and pipeline projects between China and Pakistan, Gwadar port will handle most of the oil tankers to China.

After the formal handover of the free trade zone to China last year, all business affairs of the Gwadar port in Balochistan are currently being carried out by Chinese authorities. Last year, Pakistan formally handed over the 2,281 acres free trade zone of Gwadar Port to China on a 43-year lease.

Pakistani government has already declared Gwadar port a free trade zone for the next 23 years. China is deeply interested to pour huge investments in Gwadar, which is located at the mouth of the Gulf and close to the Strait of Hormuz. Prime Minister Nawaz Sharif already said that Gwadar port would be developed on the pattern of Hong Kong, which is a model as to where the financial successes of Asia are headed. Being the builder, operator and financer of Gwadar port and also being the biggest investor in the port city, China can play the role of a major driver of growth in Gwadar as it did in Hong Kong. Having a free market economy, Hong Kong is highly dependent on international trade. China’s share is over 35 percent in international trade. Strategically located Gwadar port can be converted into a regional hub of international trade. By virtue of its geography, Gwadar has greater potential, wider scope and brighter prospects to emerge as center of trade and commerce serving at least 20 countries in the Asian region.

The development of road and rail links between the two provinces, Balochistan and Xinjiang, will give distinction to Gwadar port of becoming the gateway port for western China. Rail link will transfer goods to and from western China, changing it from a remote region into a station that will transfer goods and commodities worth billions of dollars every year.

China has already declared Kashgar, an important transit point on the ancient Silk Route and a gateway between China and Pakistan, as Special Economic Zone (SEZ). The proposed Kashgar SEZ would develop Xinjiang into a major trading hub and more energy and economic integration with South and Central Asia. The SEZs in Gwadar and Kashgar and the rail and road connectivity between the two proposed SEZs would have great economic, political and strategic implications for the whole region. On one hand, the two countries are working on laying the strategic Havelian-Khunjerab railway track in the difficult terrain of Karakoram connecting China with Pakistan from Gwadar in Balochistan. On the other hand, there are proposals to connect the Pakistan Railways with the trans-Asian railway network that will link the two countries through rail networks. This will facilitate trade to the Central Asian Republics (CARs), Russia and China and beyond.

China and Pakistan are connected with the Karakoram Highway, which is a part of the silk route that links China, Pakistan, Afghanistan, Iran and Turkey. While addressing a gathering of students and academics in Beijing, the former President Pervez Musharraf in April 2008 had first floated the idea of building gas and oil pipelines between Pakistan and China. He suggested the gas pipeline from Pakistan’s south to the Khunjerab Pass, linking the two countries, would be raised till it crossed the Pass at 15,000 feet, thereafter more than half of the length would be in descent. He proposed that gas pipeline between Iran and Pakistan could be expanded to China. A year after the Musharraf’s proposal, Beijing showed interest to import about one billion cubic feet a day through the proposed Iran-Pakistan-China (IPC).

Pakistan and China have discussed laying an oil pipeline from Gwadar Port to western China. The proposed pipeline, which is a part of China-Pakistan corridor, could be extended and connected with Iran, which has already offered to supply crude oil. In the proposed corridor, Gwadar port is likely to become a major outlet for trade between the China, Central Asia and the Gulf region. China has already taken the operational control of Gwadar Port where oil shipped from the Central Asia and the Middle East may be unloaded and transported overland to China through the proposed trade corridor. Gwadar is poised to emerge as a hub port providing facilities of warehousing, trans-shipment, transit and coastal trade and the commercial and industrial openings for international export-import trade.

Gwadar Port is of immense importance not only for trade with CARs but also for the development of Pakistan. Of course, Gwadar has the potential to become a hub of major economic and commercial activities in the region. There is a high need for establishing roads and warehousing facilities at Taftan, Chaman and Torkham borders in order to make full use of Gwadar Port. The future scenario necessitates the establishment of a strong, well-coordinated and metalloid highway and road and rail network spreading across the province and interlinking the major commercial centers in Balochistan. The CPEC project is perhaps the answer.

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