Secretary, Planning, Development and Reform briefed the meeting about the issues pertaining to energy projects under CPEC programme. Such issues included assessment of future energy requirement, delay in payments, non determination of tariff by Nepra, etc. It was stated that a synchronized demand-supply study was required to be firmed up by October, 2019 by the Power Division in order to assess energy requirements of the country.
According to official sources, the meeting was informed about delay in payments by CPPA-G in respect of Port Qasim coal-fired power plant and Sahiwal coal-fired power plant. It was emphasized that 100 per cent payment by CPPA-G to CPEC energy projects must be ensured by October 2019. It was apprised that tariff determination for 300 MW power project at Gwadar and power project at Bin Qasim is pending with Nepra since long, which is required to be finalized on priority. It was pointed out that establishment of 300 MW power project, Gwadar is essential for successful implementation of CPEC program in Gwadar. The meeting was informed about the importance of the Kohala hydropower project. Tri-partite agreement is required to be executed for the project. It was suggested that finalization of the agreement must be processed by August 30, 2019. Moreover, legal opinion on the issue of arbitration clause for the agreement is awaited from Law and Justice Division, which is required to be expedited for implementation of the project. It was stated that all matters pertaining to delay in approval of policies by Chinese leaders and Sinosure for CPEC projects, will be discussed in the next Joint Working Group on energy. Cabinet Division apprised the forum that the case for establishment of appellant tribunal for Nepra under Regulation of Generation, Transmission and Distribution of Electric Power (Amendment), Act, 2018(Nepra Act) was pending with Law and Justice Division. The committee directed Law and Justice Division to expedite the establishment of appellant tribunal under the Nepra Act.
Secretary, Planning, Development and Reform updated the meeting on the progress of Orange Line Train Project, Lahore. He stated that work on supply of electricity, water and drainage for the project was to be completed by Government of Punjab before March 15, 2019. However, it is now expected to be completed by the end of August, 2019 and test trials for the train and its operation would commence by December, 2019 and March, 2020 respectively. Regarding ML-1 project, the meeting was informed that it was very important and large project of Pakistan Railways under the CPEC program. Its estimated cost is about $ 8.2 billion. Due to the high cost the project was proposed to be completed in phases. The PC-1 of the first phase of the project costing $ 2.389 billion to be completed is under process in Planning Commission for approval of competent forum.
Minister for Railways expressed concern over slow progress on ML-1 project despite lapse of considerable time. He was of the opinion that it was the lifeline of Pakistan Railways as its future operation was dependent upon ML-1 project. He stated that required preliminary work on the project had already been done. Now there is dire need that project may be approved by the CDWP and ENNEC expeditiously. Any delay in this regard may jeopardize the survival of Pakistan Railways.
Responding to Minister for Railways, Sheikh Rashid, Advisor to the Prime Minister on Institutional Reforms and Austerity stated that economic and social benefits of ML-1 project must be assessed in order to determine viability of the project. Chinese must be engaged towards reduction in the cost of the project without changing its scope in future operations.
It was suggested that the project be moved forward in three parallel streams which were (i) a finance committee under the chairmanship of Deputy Chairman Planning Commission and relevant Ministries/ Divisions be constituted on priority. The committee to liaise with the Chinese side and commence formal negotiations to operationalize the framework agreement ( via high powdered delegation); (ii) Ministries of Planning, Development and Reforms, Finance, Railways and Economic Affairs Division are to work on the debt sustainability aspect and submit report by September 15, 2019; and (iii) Ministry of Railways is to process the case for hiring of a consulting firm to assist Government of Pakistan in assessment and execution of ML-1 project and optimize feasibility.
The meeting was apprised about the status of Rashakai Special Economic Zone(SEZ). It was informed that development of this Zone is at an advanced stage. The Federal Government is required to provide electricity and gas for it. However, PC-1s for the utilities have not yet been furnished to Ministry of Planning, Development and Reform by the concerned Divisions. It was further informed that Rs 1.1 billion would be required for laying the pipeline for supply of gas to the SEZ. It was suggested that Board of Investment (BoI) may coordinate with Government of KP for early settlement of the issues concerning SEZ. Regarding road infrastructure for the SEZ project, it was stated that requisite infrastructure would be provided by the KP government within stipulated time. CCoCPEC directed Power Division and Petroleum Division to ensure early provision of utilities i.e. electricity and gas to Rashakai SEZ. The Committee also directed Finance Division and Ministry of Planning, Development and Reform to arrange funds from PSDP 2019-20 through re-appropriation to meet cost of laying pipeline for supply of gas to Rashakai SEZ.
The meeting was informed that CPEC program is now entering into next phase of cooperation with incorporation of new areas. A new management entity is required for the purpose. The proposed entity under the name of China Pakistan Economic Corridor Authority would be consisting of Chairman, two Executive Directors and other members.
The functions of the Authority would be as follows: (i) interface with China for indentifying new areas of cooperation projects; (ii) organize meetings of Joint Cooperation Committee (JCC) and Joint Working Groups (JWGs);(iii) ensure inter-provincial and inter-ministerial coordination of CPEC related activities ;(iv) ensure narrative building and communication of CPEC related activities; and (v) conduct sectoral research for informed decision making and long- term planning.
It was stated that the draft Act for the proposed CPEC Authority would be presented to the Cabinet for approval. Advisor to the Prime Minister on Institutional Reforms and Austerity supported the idea for setting up of the proposed Authority. However, he expressed concerns over the huge size of the Authority. He suggested that Authority can be more effective and manageable as compared to larger size entity. Moreover, services of thorough professional, well-experienced and qualified personnel may be acquired for smooth functioning of the Authority.
The Advisor to the Prime Minister on Commerce, Textile, Industry and Production and Investment also suggested to have a leaner set up for the Authority. The forum directed the Ministry of Planning, Development and Reform to submit a draft bill for establishment of CPEC Authority to the Cabinet Committee for disposal of Legislative Cases (CCLC) after consultation with Law and Justice Division.
The meeting was briefed about Gwadar land use plan under the CPEC program. It was stated that Governing Council under the chairmanship of Chief Minister, Balochistan had already approved the plan. A 300 MW power plant will provide requisite power to Gwadar. Water supply to the city will be through a dam and desalination plants. Currently, two desalination plants with small capacity have been functioning. It was informed that water supply is the provincial subject therefore Government of Balochistan should take responsibility for ensuring requisite water supply to Gwadar for successful implementation of CPEC program in the city.
The forum was informed of the schedule of meetings of JCC and different JWGs. It was stated that next JCC meeting was expected to be held in October/ November, 2019. Before the meeting, different JWGs will hold their meetings. Cabinet Committee on CPEC directed Ministry of Planning, Development and Reform to coordinate with all the Ministries/ Divisions/ Provincial Departments concerned with different JWGs to carry out their necessary working/ exercises prior to JWGs meetings.
The Committee noted the position presented by the Ministry of Planning, Development and Reform on the projects under CPEC and took the following decisions: (i) inauguration of Multan Sukkur Motorway to be held during the current month. Formal invitation to the Chinese Minister for Transport be sent for the event; (ii) time lines for start of operation of the Orange Line Project by March 2020 be ensured and report on the project my be sought during the current month; (iii) a financing committee for the ML-1 project under the chairmanship of Deputy Chairman Planning Commission be notified and informed to the Chinese side to commerce formal negotiations to operationalize the framework agreement; (iv) with respect to Power and Energy, the synchronized demand-supply study till 2030 to be firmed up by October 2019 which will be made as deliverable for 9th JCC;(v) issues regarding delays in payment by CPPA be resolved and 100 per cent payments to the CPEC energy projects be ensured by the Finance Division and Power Division as per timeline approved by the Prime Minister; (vi) finalization of tri-partite agreement for Kohola Power Plant be processed. A meeting will be summoned to resolve the bottlenecks. Ministry of Law and Justice will process the issue of arbitration clause on priority; (vii) appellate tribunal for Nepra 300 MW power plant at Gwadar to be set up. Power Division will ask the Chinese company to commence work on the project. Ground breaking ceremony may be held in October 2019 and necessary coordination in this regard with Chinese company will be undertaken for the ground breaking within the time frame.
And (viii) Gwadar Port land use plan new draft land use plan for Gwadar Smart Port city will be presented to the federal cabinet for approval after incorporating the observation of the Government of Balochistan highlighted during the approval committee on August 23, 2019; (ix) Gwadar Master Plan completion will be made deliverable for 9th JCC meeting;(x) governance structure and incentive package will be finalised by the Chief Minister Balochistan in consultation with relevant stakeholders.
(xi) draft Ordinance will be presented to the federal cabinet for approval through Cabinet Committee on CCLC;(xii) the organogram of the Authority may be developed incrementally with appointment of the Chairman and EDs/ DGs in the first stage.
Rashakai SEZ ..(xiii) Rashakai SEZ will be made a model SEZ and construction of the access road through provincial ADB be commenced in 2019;(xiv) all provisions of the SEZ Act as well as incentive policies to be adhered to in true letter and spirit and no downward revision be made to the incentive package. Assurance to all investors including CRBC be given by BoI; (xv) Finance Division and State Bank of Pakistan (SBP) have been directed to ensure repatriation of the profit in Chinese RMB/ USD as committed in the investment policy and all investors be facilitated in this regard. The ease of the investor be ensured and necessary process be completed within 10 days after a requirement is raised. RMB may be promoted for repartition by Chinese enterprises in SEZs;(xvi) Power Division and Pesco will ensure provision of utilities to all prioritized SEZs on priority. The project for the transmission line and electricity grid station will be undertaken through DDWP and projected will be completed by 2019; (xvii) provision of gas will be ensured through LNG and the project will be completed with 18 months including procurement of the requisite pipes; and (xviii) ground breaking ceremony to be held on priority before 9th JCC meeting. Government of KP will ensure that Development Agreement (DA) is signed by September 15, 2019.
