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China-Pakistan: Beijing to "Further Deepen and Expand" Ties, Support Pak "Financial Stability"

@RiazHaq

Brofessor sb,

The rate of return on power project investments under CPEC is 17%,

What you missed mentioning is that 17% is denominated in dollars. In India. even in the days of fixed returns, the ROI was at best 16% and that too denominated in INRs. The approximate returns on competitively bid projects is barely in the double digits.

The wind power projects financed under CPEC is around USD 2 million per MW which is almost double those in India. similarly for solar and thermal projects too the cost charged is over 50% of what it costs in India

Admittedly, India with a better ecosystem and higher credit rating would offer lower costs and returns but nothing justifies the delta that China is charging under CPEC/

Anyway, you guys will pay (or not) for it!

Regards
 
You are repeating western propaganda against China.

Here are the facts:



Is China ripping off its all-weather friend Pakistan by charging high interest rates on loans and exorbitant guaranteed returns on investments in China Pakistan Economic Corridor (CPEC) projects? That's a question that is being asked on a frequent basis by Pakistan's friends and foes alike. While friends of China-Pakistan ties are concerned about an undue burden on Pakistanis, the foes see CPEC as an opportunity to create a lot of fear, uncertainty and doubt about it and its benefits for Pakistan's economy and society. Who's right? Who's wrong? Why? Let's dive into it.

CPEC Projects in Pakistan


Claims by CPEC Detractors:

Many Western and Indian opponents claim that the cost of CPEC financing will be so high that Pakistan will not be able to bear it. They assert that China is attempting to catch Pakistan in a debt trap from which the country will not be able to escape, eventually turning it into a Chinese colony. The financing costs for Chinese loans and investments they claim are in high teens.

Misguided Pakistani Analysts' View:

Many well-meaning Pakistanis, including serious economists, seem to echo detractors' claims without any serious examination or comparison with prevailing bench-marks. They do not mention how similar projects in other parts of the world are financed and what sort of interest rates and return-on-equity are guaranteed.

CPEC Finance Rates vs Benchmarks:

About two-thirds of Chinese CPEC funding is for power projects while one-third is for infrastructure projects like roads, rail lines and ports.

The Chinese soft loans for CPEC infrastructure projects carry an interest rate of just 1.6%, far lower than similar loans offered by the World Bank at rates of 3.8% or higher.

Chinese companies investing in Pakistan power sector are getting loans from Chinese banks at commercial interest rates. These loans will be repaid by the Chinese companies from their income from these investments, not by Pakistani taxpayers.

The rate of return guaranteed by Pakistan power regulators to the Chinese power companies is about 17%. Is it too high, as some claim? Let's compare it to the US market considered among the safest investments in the world.

Rate of Return in United States:

The average return on equity for almost 8,000 US firms is 14.49%. The power utility companies – with an average of 10.13% – are on the lower end of the spectrum because they are viewed as less risky investments.

In the United States, rate of return varies significantly from state to state, as each state regulator has exclusive authority to regulate utility operations as they choose.

In Advance Energy Economy (AEE) Power Portal database, which tracks ROE for over 100 investor-owned utilities across the country, the highest allowed ROE belongs to Alabama Power Co., at 13.75% while the lowest belongs to United Illuminating Co. (CT) at 9.15%.

Within the US states, Alabama being seen as relatively less safe for investment, offers 13.75% return. So why is it such a surprise to see Pakistani regulator offer Chinese investors a higher rate of return of 17%?

Growing Infrastructure Gap:

Development of physical infrastructure, including electricity and gas infrastructure, is essential for economic and social development of a country such as Pakistan. China-Pakistan Economic Corridor financing needs to be seen in the context of the large and growing infrastructure gap in Asia that threatens social and economic progress.

Rich countries generally raise funds for infrastructure projects by selling bonds while most developing countries rely on loans from international financial institutions such as the World Bank and the Asian Development Bank to finance infrastructure projects.

The infrastructure financing needs of the developing countries far exceed the capacity of the World Bank and the regional development banks such as ADB to fund such projects. A recent report by the Asian Development Bank warned that there is currently $1.7 trillion infrastructure gap that threatens growth in Asia. The 45 countries surveyed in the ADB report, which covers 2016-2030, are forecast to need investment of $26 trillion over 15 years to maintain growth, cut poverty and deal with climate change.



Summary:

China is financing CPEC projects at rates that are comparable to similar projects elsewhere. Chinese loans for infrastructure projects such as rails, roads and ports are at rates (2% or less) below those (3.8%) offered by the Asian Development Bank and the the World Bank. The rate of return on power project investments under CPEC is 17%, somewhat higher than the 13.75 offered by much safer US state of Alabama.

Development of physical infrastructure, including electricity and gas infrastructure, is essential for economic and social development of a country such as Pakistan. China-Pakistan Economic Corridor financing needs to be seen in the context of the large and growing infrastructure gap in Asia that threatens social and economic progress.

An unrelenting campaign of fear, uncertainty and doubt (FUD) about China-Pakistan Economic Corridor (CPEC) has been unleashed in the media in recent weeks. This strategy harkens back to the aggressive marketing techniques used by the American computer giant IBM in the 1970s to fight competition. Part of the motivation of those engaged in FUD against CPEC appears to be to check China's rise and Pakistan's rise with its friend and neighbor to the north. As in IBM's case, the greatest fear of the perpetrators of FUD is that CPEC will succeed and lift Pakistan up along with rising China. Their aim is to preserve and protect the current world order created by the Western Powers led by the United States at the end of the second world war. Pakistani government should respond to the FUD campaign against CPEC by countering it with facts and data and increasing transparency in how CPEC projects are being financed, contracted and managed.

Related Links:

Haq's Musings

Harvard Projects 5.97% Growth in Next 10 Years in Pakistan

Media Advertising Boom in Pakistan

China-Pakistan Economic Corridor to Add Over 2 Million Jobs

Pakistan's Growing Middle Class

Vehicles and Appliance Ownership in Pakistan

Rising Consumer Confidence in Pakistan

Pakistan to Build Massive Dams for Abundant Water and Power

$50 bi to $60 billion in CPEC investment has not moved a needle in Pakistan's economic fortunes. No amount of analysis changes the underlying facts

All the $50-60 billion has to be repaid. Not all of it shows up as "foreign debt"

17% is a high rate of return for a power utility
Numbers for California range from 7% to 11%
 
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$50 bi to $60 billion in CPEC investment has not moved a needle in Pakistan's economic fortunes. No amount of analysis changes the underlying facts

All the $50-60 billion has to be repaid. Not all of it shows up as "foreign debt"

17% is a high rate of return for a power utility
Numbers for California range from 7% to 11%

Energy and Infrastructure investments are long term investments. You don't see returns on them in the short term. Most CPEC projects are still ongoing. But areas where the projects have at least partially completed are already transforming people's lives.





No country has industrialized without heavy investments in the energy sector.

California electricity rates are among the highest in the US and the world.

In fact, a recent report has shown that California consumers pay around 80% more per kilowatt-hour than the national average. California ranks fourth on the list of states with the most expensive electricity rates, next to Hawaii, Rhode Island, and Alaska, according to a Choose Energy report.

 
USA has always betrayed Pakistan. Atleast the Chinese are building Pakistan.
 
The same narrative was there when Paklandis were getting educated in the west. What is common is the education. Once few Paklandis get educated then they create Islamabad and when more get educated they create failed state. When the number of eastern educated Paklandis will grow they will create China Colony rather than bringing prosperity like China.

Education expands knowledge, **** mullahs and **** mentalities will undo it.

Oh you’re another Indian. You’re a subhuman vermin, a cockroach whose history consists of being raped and enslaved by others. Those Mullahs enslaved you, took your best women and lands and then left whole bunch of their descendants deep inside your country. How do you feel about that? Quite impotence correct? It’s no wonder why you creatures have lost your minds when it comes to Muslims. You speak a language given to you by Muslims, your most famous cuisine is Muslim, and your famous landmarks are all Muslims created. No matter how hard you try and cope, you can’t escape the Muslims shadows. Now that’s funny!
 
What about Educated pakistanis adding Zero value in Pakistan? I can too go by my personal experiences spanning over 13 years what i have observed. Other staffs Pakistanis wrote, they depict lot of cumulative anger (destructive in every approach) of Pakistanis over Pakistan. Don't feel sorry, I found it entertaining by watching the demise of human intelligence in an artificial state called Pakistan. For Values, Pakistanis should stay away from pronouncing it. See how the value creation drive resulted in Pakistan. Valueless in every sphere. Sorry I felt in that way.

@waz @LeGenD

Can we do something about this subhuman Sanghi here please.
 
Energy and Infrastructure investments are long term investments. You don't see returns on them in the short term. Most CPEC projects are still ongoing. But areas where the projects have at least partially completed are already transforming people's lives.





No country has industrialized without heavy investments in the energy sector.

California electricity rates are among the highest in the US and the world.

In fact, a recent report has shown that California consumers pay around 80% more per kilowatt-hour than the national average. California ranks fourth on the list of states with the most expensive electricity rates, next to Hawaii, Rhode Island, and Alaska, according to a Choose Energy report.


if you somehow think electricity generation is going to lead to economic growth keep dreaming. Intel is not locating a fab in Pakistan now that you have a few power generation facilities.

I won't touch the fact you cannot afford the electricity charged by the Chinese IPPs

Look no further than this power plant
 
if you somehow think electricity generation is going to lead to economic growth keep dreaming. Intel is not locating a fab in Pakistan now that you have a few power generation facilities.

I won't touch the fact you cannot afford the electricity charged by the Chinese IPPs

Look no further than this power plant
this thread has exposed you as an indian buddy. Why you pretend to be white all the time its pathetic man,
 
I do understand your feelings towards CPEC project. Being an Indian, you are entitled of dreaming of undoing the partition of 1947 and achieving the goal of Akhund Bharat. Your resentment towards anything that is beneficial to Pakistan is justified. However, a lot of water has flown under the bridges. Undoing the partition is not possible at all. Earlier the Indians get that realization, better it is for them and the people of this region.

Coming back to the CPEC project, I believe, this project has now brought Pakistan at an extremely crucial junction in this country's history. The rail link between China and Gwadar is something that, if successfully completed and operationalized, will turn Pakistan into a global trade link. As US Fox News channel has rightly pointed out that the completion of this project will have serious implications for global trade. To understand that we need to realize a bit of the background.

China currently has probably the biggest volume of international trade in the whole world. It imports huge volumes of energy supplies and other raw materials from the world and exports goods worth trillions of dollar every year. All that trade is currently channeled through only the strait of Malacca. There are a number of reasons why that is not desirable. For one, that channel is probably fast reaching to its capacity. Second, it's longer and hence economically less feasible. But the most importantly, it's will be a disaster for global trade and economy, including that of Europe and America, if the trade through strait of Malacca is disrupted due to any reason such as accidents, war hostilities, tsunami, etc. An alternative is thus desperately desired. Gwadar offers the shortest, safest, and economically the most feasible alternative. Once it becomes operational, a prosperous and nuclear-powered Pakistan will protect this route to the benefit of the global trade and economy. And that's what brings the severe pain in the neck for Indians the most.

Regarding the much-trumpeted debt trap, Chinese are to be blames probably the least. If Sri Lanka (Bangladesh, or Pakistan) government is unwilling or unable of turning Chinese investment into really successful national projects, then these governments need to be blamed for their inability, nepotism, corruption, and short-sightedness. But in Pakistan's case, Chinese investment and assistance, both the civilian CPEC and military domains, has proved to be very helpful. For example, Pakistan is no more prone to the traditional Western blackmail while selling their military equipment to us thanks to the very effective assistance from our Chinese iron brothers.

On the civilian side, Pakistan successfully got rid of sever power shortages a few years ago only with Chinese investment in our power projects (and that too when no other country was willing to invent a penny in such projects). By now, we were supposed to have completed most of the construction of ML1 (a new parallel high-speed railway track spanning north-south Pakistan), established at least seven special economic/industrial zones (for manufacturing and exporting products), and operationalizing trade road for import/export of Chinese goods through Gwadar. If the IK government miserably failed in achieving all these pre-set goals and rather managed to make our Chinese friends disgruntled, it's no fault of CPEC projects.

After getting imposed by that duo of Bajwa and Faiz, this brainless idiot IK made it a mantra to trumpet of imaginary overwhelming corruption of previous governments (without any proof or evidence) during his state visits to other countries. The question is what the heck he was trying achieve? Implicating the host governments too for their cooperation with previous Pak government? He and his brainless minsters did the same thing during their state visit to China and got rebuffed by their hosts. His foolish claims of mega corruption by SS in CPEC projects disgruntled our Chinese friends and that was perhaps the real purpose of installing this mentally-sick dude with largely dysfunctional brain onto Pakistani people. When later it turned out that this filthy criminal, his family, and his gang of crooks were ripping this nation off like there was no second day, all our friendly governments started giving cold-shoulder and keeping a distance from IK and his government. Pakistan indeed got diplomatically isolated towards the end of IK's incompetent and corrupt government.

However, that duo of Bajwa and Faiz kept building their evil network of mafia by installing their own men in every key position (admin - civil and khaki - judiciary, media, etc.) with plans to run the show until at least 2035. You can imagine that judge mafia even started calculating when and who will be the CJ of Pakistan and positioning/appointing their own persons at the right numbers/places. Such long planning and calculations were used by disgraced scumbags like Saqib Nisar and Bandial to position their close relatives to ultimately sit in the CJ's chair. All that shows why junior judges were being promoted out of turn. The planned filth was overwhelming and meant for someones getting extension in their tenure being chief, some to become chief, and others positioned right to become chief in future. Allah SwT saved us from this filthy mafia just at the brink. Alhamdulillah.

I hope the efforts by the current leadership (both civilian and military) would bear the fruit and bring the CPEC projects on the track once again. Let's hope the special processing/industrial zones become a reality, some of Chinese industry is relocated into those zones, ML1 project gets out of freeze, and the halted work on all Chinese projects in Pakistan gets re-started once again into full swing.

The government Of Pakistan should also try convincing the international community that CPEC is not a military project at all leave alone being against any one country in world. Far from that, it is purely an infrastructure project meant for facilitating and promoting global trade. Having an alternate route of strait of Malacca is in the best interest of global community. It must not be seen under the prism of US-China rivalry. Rather everyone, including the West, should try to augment it and take a leverage of it for bringing the prosperity to the mankind. Indians, in the meantime, can keep burning in their own fire of hate and jealousy towards Pakistani people and departing for their chittah with all their desires of Akhund Bharat buried into their chest.
Some one got any news or further development on this regional alliance?
 

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