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2016: The year of the CPEC

It was conceived back in the 1990s, and the first approach to

Pakistan from China about connecting Chinas western
provinces to the Arabian Sea came in 1999. Gwadar port was
built in the mid-2000s, and many of the MoUs were signed
after 2010.

The key agreement for the projects to be listed under the China
Pakistan Economic Corridor (CPEC) was signed in 2013, and
term sheets for them were signed during President Xi Jinpings
visit to Pakistan in 2015. But the outgoing year was when work
began in earnest.

In 2016, Pakistans first utility-scale solar power generation

plant went into commercial operations, digging began in the
Thar desert for a coal-fired mine mouth power plant, and the
first trade convoy carrying goods from China travelled down
the newly constructed roads of the western route and arrived in
Gwadar for a large ceremonial send-off.

Examine: Tale of two CPECs

The shape and outlines of the corridor projects first began to

appear before us in this year, and decades from now when
historians would look back at the origins of Pakistans tight
embrace of China, they will identify 2016 as the year in which it
all started happening.

But the year also brought its share of unanticipated

consequences. It was the year when numerous projects were
found to have defective feasibility studies, or when they were
found to be financially un-viable.

The largest CPEC power project, the coal-fired power plants at

Gadani, was shelved during the year, and the coal project in
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Gadani, was shelved during the year, and the coal project in
Kalar Kahar was cancelled altogether.

The solar tariff upon which the first solar power plant at
Quaid-e-Azam park in Bahawalpur was built, was found by
Nepra to be unworkable, forcing the regulator to revisit the
tariff and prompting a court challenge that will likely roll into
the next year.

Until that matter is resolved, further investments in solar will
remain blocked. Wind tariffs are similarly in turmoil with a
string of review petitions awaiting a hearing.

This is the year when Pakistan began to learn what CPEC really
is. The perils and promises alike took shape. If the venture is a
game-changer, as is being claimed by the government, then
the myriad hearings, successes, and court cases of the year
gone by would suggest that the game is a long one.

If it is not a game changer, as the sceptics claim, then the

problems that pinned down the implementation of many of
the projects will eventually grow to engulf the corridor has a
whole. It will be a few more years before judgement can be
passed on this important question, but the answer began
cropping up for the first time in 2016.

This was also the year in which the controversy surrounding

the route of the proposed road infrastructure subsided. A few
stray comments aside, the string of resolutions being passed in
provincial assemblies slowed to a trickle and attention turned
towards the more substantive issues of financing instead.

It was also the year in which the security question marks began
to fade away, as the insurgency in Balochistan subsided
(although they did not disappear), with roadside shootings and
IED attacks coming down sharply. Security remains a big
concern for the future, but it has certainly been reduced.

Alongside the reduction in security threats, the costs of the

new security architecture also appeared during the year. The
so-called CPEC security force was created in the second half of
last year, but its deployment and future size took concrete
shape in 2016.
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A maritime security force to protect CPEC-related shipping was

also launched during the year.

The year also saw the financial impact of the force, as the

government began asking the provinces to share the burden of

the costs (estimated at almost 3pc of the federal divisible pool),
and the provinces gearing up to resist. All this happened in the
closing months of the year, and from here on, the issues
around burden-sharing are likely to grow to eventually
overshadow the controversies surrounding the route plan.

The year has been a pivotal one for CPEC. Many of the
questions regarding the project were answered, and new ones
raised. What the project means for Pakistan and what it will
look like upon completion also came into sharper relief.

The depth of the controversies surrounding the project was

also revealed. The reality of the project was revealed, as well as
the rhetoric. However, the battle between reality and rhetoric
is likely to intensify as the implementation stage moves
forward.

Today CPEC stands as the only answer Pakistan can give to any
of its challenges. It is expected to bridge the power crisis for us,
revive exports, create jobs, serve as the motor force for the
growth rate of the economy, create demand and infrastructure,
and address urban congestion through mass transit schemes.

It is also being tapped as the solution to a persistent slump in

agriculture as well as creating the grounds for greater cultural
exchanges between both countries. How much of this is reality
and how much rhetoric? The year 2016 is when this question
was launched, and how it plays it out in years to come will be
central in deciding how much of a game-changer the project
turns out to be.

For China, the year 2016 was when the country began to
discover the complexities of doing business in Pakistan. The
raft of Chinese investments that are already in Pakistan from
telecom's to oil and gas have not encountered anything
closely similar to the political controversies that the CPEC
projects have been subjected to.
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projects have been subjected to.

The new round of negotiations on the renewal of a Free Trade

Agreement with China, originally signed in 2006, began this
year with the government taking a slightly more strident stand

in the name of domestic industry than before.

Both China and Pakistan began to discover the reality of

embracing each other more tightly in 2016. In the years to
come, will reality triumph over rhetoric to yield a truly strong
and enduring partnership? Or will the embrace turn into a
something a little more sinister? The question arose in 2016,
and the answer lies in the years ahead.

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