Nov 24 - 30, 2008

The fate of mega development projects including Gwadar port launched under previous Musharraf administration in Balochistan presently seems uncertain owing to unavailability of funds to continue these projects. Balochistan Chief Minister Nawab Aslam Raisani in his recent meeting with Planning Commission's deputy chairman has already expressed concern over the freezing of development funds at a time when the province needs special attention from the government.

The contractors, who recently stopped work on the construction of roads connecting Gwadar with Iran and the country's other provinces, have been apprehensive about release of funds after the federal government decided to cut the current Public Sector Development Plan (PSDP) by Rs100 billion.

"The Rs100 billion cut will not affect the ongoing mega projects in Balochistan. The projects will continue, as federal government has not frozen development funds allocated for the province in the current fiscal year's PSDP," said professor Tousif Akhtar, the Balochistan member of penal of economists, Planning Commission of Pakistan.

The real issue with respect to Balochistan development agenda is the continuation and completion of all development schemes and mega projects launched by the former federal government. While Mirani Dam has been inaugurated, Subakzai dam is in the final stages of completion. Similarly, first phase of Gwadar port project has been completed and it has officially been handed over to Singapore-based operators and opened last year. The Mekran coastal highway has also been completed and officially inaugurated. While production and export has been started from Saindak copper and gold project, the Reko-Dik copper project is underway in Chagai district.

The roadmap for Balochistan's development as drawn under Musharraf administration by launching Mega projects was mainly aimed at opening the strategically located province for foreign investments and exploiting its vast natural resources. The roadmap however, lacked the comprehensive strategy to develop human resources and bring political reconciliation in the province.

Professor Tousif told this scribe that the projects that would contribute to the GDP, were not going to be stopped. Gwadar seaport is the most important project for the country and the province that is expected to contribute to the national and provincial exchequer significantly. The ground reality is however that the project has come to a standstill and since the first shipment at Gwadar port in March, no economic activity has yet been seen and the port is still waiting for the second shipment. The federal finance minister has recently said that Gwadar would soon be used for unloading ships carrying the imported wheat. According to one estimate, a fully functional Gwadar port could earn handsome revenue of $40 billion a year.

Will Gwadar port contribute to the provincial exchequer, as local and municipal taxes have been revoked. Singapore-based Gwadar port operators had been exempted from all local and provincial taxes for 20 years. Balochistan Finance secretary Mehfooz Ali Khan however told this scribe that there was nothing in black and white about exemption of local and provincial taxes. Gwadar's development as free port on lines of Dubai certainly promises massive investment (both foreign and domestic), greater generation of employment opportunities and more development projects in different sectors of provincial economy. The province has a fragile fiscal base with a heavy debt burden. It is expected that Gwadar port project would strengthen the fiscal base and then gradually widen the revenue base of the province, which excessively depends upon the resources received from federal government.

Kachhi Canal is one of the priority projects being executed by Wapda under 'Vision 2025' Programme. The project is aimed at developing irrigation and drinking water facilities for arid and water starved regions in Dera Bugti, Naseerabad and Kachhi districts. The phase-I of the project is not expected to be completed by December 2008. The lack of proper planning and faulty procedural codes have increased the cost of the Kachhi canal project from Rs31.2 billion to over Rs70 billion. An estimated 0.713 million acres of land will be irrigated from Kachhi canal project. The first phase of this project is aimed at supplying about 1.5 Million Acre Feet (MAF) of water out of flood flows of Indus River and from the province's share in perennial flows.

Makran Coastal Highway was considered to be a marvel of road engineering when it was inaugurated in December 2004. This marvel of road engineering was first damaged by rains and floods in 2005. The National Highway Authority had carried out a detailed survey of the entire area. Satellite images of catchment's areas and the behavior of various structures were studied and a number of measures taken to improve the drainage system to ensure protection, in the event of another monsoon catastrophe. But all efforts were fizzled out last year when cyclone hit the Balochistan coast and torrential rains severely damaged the coastal highway. The cyclone exposed some serious flaws in designing at some of the locations of the Coastal Highway after it was washed away by rains and floods at various points. The rehabilitation cost of the coastal highway was estimated at Rs300 million.

After 2005 rains, Rs 150 million were spent on streamlining the highway, plugging of breaches and adding new culverts at various locations. The inadequate planning turned the project into a white elephant. Redesigning of the coastal highway will need more funds. Local experts believe that coastal highway project was undertaken in haste and without proper planning. Flaws in its designing at some locations have surfaced, as no study or data was available for annual rains and floods.

Saindak copper-gold project, which was leased out to Metallurgical Construction Corporation of China (MCC) for 10 years in September 2002 in Chaghi district, is not really yielding prudent return to Pakistan. The project has been without any independent monitoring for the last five years. There have been reports about excessive mining at the site and higher production of blister copper, which may reduce the estimated 19 year life of the Saindak mine. If the excessive mining goes unchecked, the Chinese contractors will exploit all the resource in 10-year lease-period leaving no copper and gold for Pakistan. Technical calculations and financial data need to be maintained about the project's return in terms of production and sale of precious metals.

Balochistan is currently reeling under the devastating impacts of earthquake. The calamity-hit province is currently facing an acute shortfall of funds to meet its development program for the current fiscal year. While the province is already facing the devastations brought about by an earthquake that hit the central and northern areas on October 29, the provincial government has already been seeking more funds from the federal government to rehabilitate people affected by floods.