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How to review the utilities in Pakistan?

Public utility is the general term for various businesses that serve people’s daily life, which possesses the basic characteristics of various enterprises. It is commonly referred to as urban infrastructure and municipal services, which mainly involves environmental sanitation, transportation, water supply, electricity, gas distribution and supply, and other public daily services. Public utilities are an indispensable part of people’s lives and are also the basic conditions for urban development and survival. It measures the country’s economic development level and the resident life index. In addition, public utilities can improve labor productivity throughout the city, improve people’s quality of life, and create favorable living conditions for residents.

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Due to the public welfare of utility, it is necessary to strengthen its supervision. In addition, the infrastructure is also the key to build the “Belt and Road”. The supervision of public utilities has already had relatively mature experience in developed countries, which is worth learning for all countries in the world. For example, the United States tends to establish an independent public utility institution in order to improve the regulation of utilities. However, the policies for regulating public utilities vary from country to country because of the geographical location, land area, climate differences, etc., especially the economic and political systems. This article will take Pakistan as an example to explore how the country will regulate its utility business.

The relationship between China and Pakistan has always been favorable, and the strategic pace of cooperation between the two countries is accelerating. According to the “China-Pakistan Economic Corridor Construction Agreement”, Pakistan received a project grant of US$45.6 billion in November 2014, which aimed to build various public utilities including roads, railways, oil and gas pipelines, and communication optical cables. In addition, the Pakistani government also announced the “2015 Power Generation Policy”, which applied to new energy utilities projects such as hydropower, coal, fuel and natural gas. In the financial budget of 2014-2015, the Pakistani government carried out the plan of transportation infrastructure development, covering 74 public utility projects including roads, bridges, tunnels to regional roads.

Power shortage has been the main reason for the stagnation of the Pakistani economy. In the past few years, official data of Pakistan showed that a power shortage in Pakistan reached up to 2.3 GW, which was unlikely to make up for this gap in the short term. According to the reports, the World Bank and Pakistan signed a financing agreement to allocate $100 million in January 2019 to the Shun Tak Solar Project to provide renewable energy and electricity for its people. The project supported three segments of Suntech’s solar power generation: utility-scale, distributed generation, and home generation. The Pakistani government has been managing public utilities in a variety of ways, trying to bring convenience to its people and improve the national happiness index.

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Pakistan’s coal reserves have reached up to 1 billion tons by June 2016, but coal power generation accounted for only a small part of the power generation. Research showed that Pakistan’s annual coal consumption accounts for only 6.5% of total energy demand. In addition, Pakistan’s State Electricity Regulatory Authority has decided to increase coal-fired prepaid electricity prices by 10-20% since 2014 so that investors can recover the costs in the next three years. According to this, the returning rate of China’s investment in the Taal coal mine will hit a new high in the history of Pakistan. What’s more, multilateral financial institutions such as the Asian Development Bank and the Islamic Development Bank have also provided financing to the Pakistani coal-fired power project. In addition, China is the only country that has pledged to help Pakistan develop coal power.

 

When it comes to Pakistani road construction, the roads have reached up to approximately 263,775 kilometers by the end of the year 2013, including six highways, 17 national highways, three strategic highways, and several auxiliary roads. There are connections between Pakistan and its neighbors, however, only 60% of Pakistani roads have been laid by June 2016. One of the reasons was that unpaved roads were mostly located in rugged mountainous areas. What’s worse, mountain paving work was often interfered by hostile forces, hindering the laying work. The most important reason was the lack of professional road personnel and funds in Pakistan. Therefore, the Pakistani government has introduced foreign capital and private capital to participate in road construction. In November 2014, Pakistan received a project grant of US$45.6 billion according to the “China-Pakistan Economic Corridor Construction Agreement”, which was used to build various roads projects. In the financial budget of 2014-2015, the Pakistani government developed a large-scale transportation infrastructure development plan, including 74 projects with regard to roads, bridges, tunnel to the road and its initial allocation reached up to Rs. 113 billion.

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In addition to road construction, Pakistan manages its public utilities from the railway side. Pakistan’s railway construction began in 1861, but the railway construction has been stagnant for a long time because of the lack of funds, geographical location, and other factors. The small railway coverage and unbalanced layout have limited trade in Pakistan. Like highway construction, the Pakistani government has also adopted a way of seeking foreign investment and private capital to promote railway construction. In the railway construction plan of 2014-2015, the Pakistani government budget allocated 770 billion rupees for the construction of 45 railway projects and introduced policies to encourage large-scale private investment in this field. At the same time, China is also a participant in Pakistan’s railway construction and has conducted preliminary research on Pakistan’s railway construction.

When it comes to utilities, people will think about nuclear power construction. The development of nuclear power energy and the optimization and sustainable development of the power industry are of great significance for enhancing the country’s comprehensive economic strength and international status. Currently, there are several nuclear power plants are in operation in Pakistan. According to the Pakistan Atomic Energy Commission (PAEC), it is estimated that the nuclear power installed capacity of the Pakistani nuclear power will reach 8,800 MW by 2030. However, the government is also faced with the question of whether neighboring countries and the world’s major nuclear powers would be used to manufacture nuclear weapons. In addition, Chinese-funded enterprises have always been the biggest supporters of technology and capital in the development of nuclear power in Pakistan.

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All in all, the public utilities of Pakistan have been developing in a good trend. Besides, the infrastructure is getting better and better, and the system is becoming more and more mature. The government will also pay more attention to public utilities and strive to do better in terms of gas, coal, roads and environmental sanitation so as to improve people’s quality of life and happiness index.

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