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China inks huge dam contract in Pakistan

2017-03-10

Source: Global Times    Published: 2017-3-10


A Chinese enterprise inked two contracts for a huge hydropower station in Pakistan on Wednesday, a cooperation that experts say will benefit both Chinese enterprises struggling to shed overcapacity and will improve livelihoods in Pakistan.


Chinese power major China Gezhouba Group Company (CGGC) signed deals to carry out the main civil works in the first stage of the Dasu hydropower project, the largest such project by capacity in Pakistan.


Syed Muzammil Hussain, former Pakistani Water and Power Development Authority Chairman, said the cost of the first phase of the project was projected at $4.2 billion, and would lead to 2,160 megawatts (MW) of power generation in four to five years, the Dawn newspaper reported on Thursday.


The project will be constructed on the Indus River near Dasu town in Khyber Pakhtunkhwa (KP) province, 345 kilometers from Islamabad.


Previously, China`s Three Gorges Corp started construction of the 720 MW Karot Project in January 2016. Chinese companies are also building coal-fired power plants in southern Pakistan and a nuclear power station near Karachi.


Federal Water and Power Minister Khawaja Muhammad Asif has said the project will help the Pakistani government to end electricity outages in early 2018.


CGGC said in a statement that the project will be one of the most difficult hydropower stations to build, and will have the largest capacity and investment in Pakistan. It will also alleviate local power shortages and create a large number of employment opportunities, it said. The project is expected to create 8,000 jobs for the local community, according to news portal people.com.cn.


Zhou Rong, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, said it is worth noting that these employment opportunities will be brought to an underdeveloped ethnic region.


"When people set foot on the path of prosperity, with the help of Chinese builders, they will develop a heartfelt feeling toward China, providing double assurance to the iron-clad relationship between China and Pakistan," Zhou told the Global Times Thursday.


The Dasu project is a flagship project of the China-Pakistan Economic Corridor (CPEC), a part of the Belt and Road initiative. Media reports in Pakistan estimate the total investment for the CPEC will be $46 billion.


Shed domestic overcapacity


Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, said the inking of the deal is conducive to Chinese enterprises` efforts to shed overcapacity in the domestic market.


"China has a strong hydropower industry, but as more hydro plants are built in China and the number of suitable sites for future projects diminish, the industry needs to look abroad and go overseas," Lin told the Global Times Thursday.


Zhou said the Dasu deal, which came after years of delay, is an example of a Chinese builder balancing a conflict of interest between the central and provincial governments of Pakistan.


"There are more terrorist attacks in Baluchistan and KP than the rest of Pakistan. This project getting the green light shows China`s efforts to make the development of the CPEC more balanced between the developed and undeveloped regions, and between safer and riskier regions of Pakistan," Zhou noted.


Many of the CPEC projects are located in Punjab and Sindh, which makes economic sense as these more developed provinces are home to about 80 percent of the Pakistan population, but there are voices from other provinces that the CPEC should be more balanced.


Zhou said the Dasu project demonstrates that the CPEC will benefit all of Pakistan. It is positive to see Chinese companies have learnt how to dive in to the local market and win grass-roots support, he said.


The success of huge projects like Dasu will lead to more cooperation in the future, Lin said, as an increasing number of Chinese enterprises are investing overseas.


Last year alone, Chinese companies made $14.53 billion of direct investment in economies along the Belt and Road route, data from the Ministry of Commerce showed.


Zhou Rong is a senior research fellow of Chongyang Institute for Financial Studies at Renmin University of China.

Key Words: Pakistan   CPEC   investment   Zhou Rong  

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