CPEC in Pakistan’s Quest for Energy Security: Clarifying Some Misperceptions

Abstract

Since the inception of the China-Pakistan Economic Corridor (CPEC), one of the six corridors envisaged under President Xi’s signature Belt and Road Initiative (BRI) in Pakistan, there has been criticism in academic circles as well as media about sustainability issues. In an article published in Strategic Analysis in 2017 entitled “CPEC in Pakistan’s Quest for Energy Security,” the authors raised some questions related to Chinese-funded projects. Based on the overall analysis of various CPEC projects, the paper had reached several conclusions. First, it stated that “the prospects of Pakistan being energy sufficient seem bleak for several reasons” related to the lack of proper implementation mechanisms. Second, it argued that there are discrepancies concerning financing of CPEC energy projects as it was not clear whether it was loan or foreign direct investment (FDI). In the same vein, the authors asserted that “most of the projects would be financed by Pakistan, not by China or other foreign investors.” Third, the paper emphasized that there are concerns that Chinese companies would bring their own labor. The authors also highlighted the issue of tied aid or loans as most of the procurement involved Chinese products and services. And finally, the paper discussed the issue of special incentives given to Chinese companies as they are exempted from various taxes. Based on primary data obtained in Pakistan and complemented by secondary data available in the form of government documents and policy reports of national and international organizations, this paper challenges the major assumptions presented in the previous work on this subject. The study concludes that although there are issues in smooth implementation of projects, the CPEC has the potential to make Pakistan energy sufficient and usher in a new era of development.