Tuesday, May 30, 2017

LoI issued for 300MW coal project at Gwadar


ISLAMABAD - Pakistan Power and Infrastructure Board (PPIB) on Tuesday issued Letter of Interest (LOI) to China Communications Construction Company Limited (CCCC) for development of 300MW imported coal-fired power project at Gwadar.

The documents in this regard were signed by PPIB Manging Director Shah Jehan Mirza and CCCC Vice President Xu Jun. Under the plan, M/S CCCC would develop the 300MW power project utilising imported coal at Gwadar, Balochistan. The estimated cost of the project is $600 million and it is part of flagship China-Pakistan Economic Corridor (CPEC). Gwadar Port Authority (GPA)/Gwadar Development Authority (GDA) is the supervising agency. It was agreed that the company will obtain tariff approval from Nepra and start construction after achievement of financial closing. The said project has been approved by the Joint Cooperation Committee (JCC) of CPEC and PPIB Board for further processing.

With the addition of 300MW Gwadar Power Project, the portfolio of power generation projects being processed by PPIB has number to nine coal based projects of 8220MW and three hydro based projects of 2714MW constituting aggregate total of 12 projects of 10934MW under the CPEC.

The economic activities foreseen at Gwadar in the near future would require a reliable power supply which is possible only with the installation of energy generation plant locally, however instead of using environment-friendly fuel the government has decided to run it on dirty fuel. While the world is busy saying good bye to coal based electricity, the government of Pakistan is bent to install coal power plant at Gwadar port.

It is pertinent to mention here that Federal Minister for Planning Ahsan Iqbal had earlier ordered the switching over of Gwadar coal power plant to oil/LNG. In this regard, Ahsan also showed discontent over the Ministry of Water and Power for making delay in formulating plan for switching the proposed Gwadar coal based power plant from coal to cleaner fuel. The minister had even directed the concerned ministry’s officials to finalise the conversion plan from coal to oil/LNG within one week.

As per the earlier stand of the government, the move of switching over the power plant from coal to cleaner fuel was taken because the proposed power plant is of subcritical coal technology which will pollute the environment of the new developed port. The coal power plant of 600MW is being developed with super critical technology which is relatively environmentally safe; however 300MW power plants don’t come in super critical technology. However, all of the sudden the decision was changed and now once the government claims that environment-friend technology will be installed at Gwadar.

Globally there is move against the use of coal in power generation and the number of coal-fired power plants in pre-construction stage fell by almost 48 percent in 2016. Several countries, particularly China and India, dropped hundreds of coal based projects. Earlier in 2016, China has cancelled or put on hold 100s of under construction/planned coal fired projects. Over all, china use of coal is on decline since 2013. Similarly, the United States has shifted to gas, wind and solar as the country has retired 13 gigawatts in 2015. In India, banks have refused to finance the coal fired projects and resultantly the government has to put around dozen coal fired projects on hold.

However, a good was seen here in Pakistan too as in February Pakistan and China agreed to remove coal projects from the CPEC portfolio. The projects which were dropped includes Muzaffargarh Coal Power Project (1,320MW), Salt Range Mine Mouth Power Project (300MW) including mining, Gaddani Power Park (1,320MW

New Silk Road: Is there a China plan for M’sia?


Dennis Ignatius
30 May 2017, AM 8:38 (Updated 30 May 2017, AM 9:10)

 china editorspick


COMMENT | The leaked China-Pakistan Economic Corridor (CPEC) Long Term Plan invariably invites questions about China’s plans for Malaysia.

Given the detailed and comprehensive planning that went into CPEC, it is more than likely, given the country’s strategic location and its critical importance to the success of the One Belt One Road (OBOR) initiative in Southeast Asia, that a similar master plan for Malaysia has been crafted.

What are we to make of the profusion of projects (many of dubious value), the huge infrastructure proposals, the purchase of key national assets, the billions of loans and investments being offered, the new cities that are being built and offered for sale primarily to China nationals, the burgeoning military and security cooperation, and China’s increasing political involvement in our domestic affairs?

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Is it merely a natural evolution in bilateral cooperation or is it part of some wider strategy? 

Discerning the game plan

While we do not have leaked documents to fall back on, there is already sufficient information based on public statements, policies and actions to make some assumptions about China’s Malaysia strategy.

It is, for example, safe to conclude that China’s interest in Malaysia, as with Pakistan, is as much about geopolitics as it is about economics. 

As in Pakistan (and Cambodia and Laos as well), a key goal appears to be the creation of a pliant government, one that is sensitive to, and fully supportive of, China’s wider geopolitical interests.

Political influence also makes possible the achievement of another equally important objective: the integration of the local economy into China’s supply chain and access to markets for Chinese technology, skills, products and labour.

This is a major preoccupation of the Chinese Communist Party as its legitimacy depends on maintaining steady growth rates and creating new jobs; a massive challenge given the millions of young people who enter the labour market each year. It is not unusual, for example, for up to 10,000 applicants to vie for a single job.

Keeping China’s factories running at optimal capacity, securing new contracts and job opportunities overseas, ensuring a steady supply of raw materials and market access undergirds the whole OBOR initiative.

While such a preoccupation is, of course, not unique to China, its size, proximity and power presents unique challenges for smaller economies.

Exploiting vulnerabilities

In Malaysia, internal weaknesses (the 1MDB scandal, corruption, ethnic, religious and political division, declining productivity, mismanagement, etc) have provided China with extraordinary opportunities to maximise its leverage.

China has, for example, been quick to capitalise on the 1MDB imbroglio to expand its influence over the administration, push for maximum political and economic concessions and leapfrog other countries to become primus inter pares among Malaysia’s partners.

China’s economic and diplomatic strategy has already yielded impressive dividends as Malaysia shifts significantly closer to China, upending the more cautious and nuanced approach to big power relations that has long been the hallmark of Malaysia’s foreign policy.

In short order, Malaysia has moved to purchase naval vessels from China, open its ports to Chinese warships and submarines and invite the People’s Liberation Army to participate in joint land exercises, something that would have been unthinkable not so long ago.

Prime Minister Najib Razak has hinted that a new mutual defence partnership with China might be in the offing as well.

In keeping with the new closeness to China, the Najib administration appears to have also opted for a policy of benign neglect in respect of China’s territorial claims in the South China Sea. It is not inconceivable that both sides are quietly discussing shared sovereignty and joint exploitation of oil, gas and fishery resources. Such an agreement would be a major concession to China.

The new ‘Kapitan Cina

In the meantime, Chinese embassy officials are staking out a role for themselves in our domestic politics in contravention of established bilateral principles and diplomatic norms.

Embassy officials now regularly accompany government politicians on constituency visits and to meetings of local trade and clan associations where they openly enjoin Malaysian citizens of Chinese origin to support the Malaysian Chinese Association (MCA) and laud the Najib administration’s pro-China policies. The Chinese ambassador himself has emerged as one of the MCA’s strongest supporters and has criss-crossed the country speaking in its favour.

His active involvement in domestic politics has earned him the nickname ‘Kapitan Cina’ (a colonial-era appointee vested with significant power to act and speak on behalf of the Chinese community).

How far China will go to protect its increasing interests in Malaysia and ensure that pro-China personalities, political parties and policies remain in place is a key question.

Rapidly growing economic influence

At the economic level, China appears to have used its new-found influence to rapidly embed itself in key sectors of the economy. It has, for example, become the second largest independent power producer in the country through its takeover of the 1MDB-linked Edra Energy and, in time, could emerge as the largest automobile manufacturer thanks to the recent deal between Proton and Geely.

Many of the infrastructure projects given to China on a preferential basis, will further strengthen China’s influence over the economy while at the same time significantly increasing the nation’s indebtedness to China for decades to come.

While many insist that there is nothing sinister about China’s participation in the economy, the lack of transparency and governance standards is troubling and raises questions about whose interests are being served.

Whether it is purchasing submarines from France or contracting China to build railways, a lack of transparency invariably gives rise to all sorts of suspicions, particularly in a country like Malaysia which is riddled through and through with corruption.

Furthermore, it is more than passing strange that all of a sudden Malaysia has to upgrade all of its ports, build some new ones as well as invest in two, maybe three, new railway projects - all with China’s assistance. It is a godsend for China, of course, but the case that it is in Malaysia’s interest has not yet been made.

It doesn’t help either that independent reviews of projects such as the East Coast Railway suggests that it is massively overpriced, of dubious economic benefit and heavily skewed in China’s favour.

How is it that China keeps coming out ahead time and again in all these mega projects?

Malaysians, who already have good reason to be distrustful of their government, cannot but view these developments with grave concern.

Where are we headed?

Of course, none of these developments in themselves suggest that Malaysia is now a client state.

However, when a bilateral relationship shifts so dramatically, when a foreign power makes such rapid political and economic inroads, when it suddenly acquires a monopoly of major infrastructure projects, when it begins to involve itself in domestic affairs, it does raise questions about where the relationship is ultimately headed.

And, while OBOR itself may bring some benefits to Malaysia, the way both governments are going about pursuing it leaves much to be desired. Without greater political and economic transparency and accountability, closer relations with China will always be dogged by suspicion and controversy.

Next: Demons within, dragons without

Part 1: Pathway to prosperity or slippery slope to subjugation?

DENNIS IGNATIUS, a former Malaysian ambassador, firmly believes that we should put our trust not in the leadership of politicians but in the sanctity of great institutions - our secular and democratic constitution, a democratically elected parliament, an independent judiciary, a free press and a government fully accountable to the people. He blogs here.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini

OBOR: How infrastructure funding trumps geopolitics


By JON CONNARS, Independent Risk Analyst and ResearcherMAY 30, 2017 2:28 AM (UTC+8)821

Asia Times is not responsible for the opinions, facts or any media content presented by contributors. In case of abuse, click here to report.

You know Donald Trump’s “America First” policy is “working” in the Asia Pacific when Japan wholeheartedly shows its interest in two Chinese-led initiatives – in the same week. In an unexpected about-face, Tokyo sent a big delegation to China’s first Silk Road forum, while also signaling its readiness to join the Beijing-led Asian Infrastructure Investment Bank (AIIB). The vast transnational project, the One Belt, One Road (OBOR) initiative, that Tokyo seems to be flirting with is symptomatic of a tectonic shift in international diplomacy: the retreat of Cold War-era power dynamics and the ascent of infrastructure-building as a major diplomatic tool.

Securing the involvement of 68 countries with initial costs rising to over US$1 trillion, OBOR is a clear challenge to the regional leadership of the United States in the Asia-Pacific

Securing the involvement of 68 countries with initial costs rising to over $1 trillion, OBOR, also known as Belt and Road, is a clear challenge to the regional leadership of the United States in the Asia-Pacific. As President Donald Trump continues his baffling “America First” approach to international politics, more and more foreign leaders should be excused for looking towards China for economic and political leadership.


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Opportunities and integration across Eurasia

The OBOR initiative is reviving Chinese involvement across Eurasia, delivering much-needed economic aid to impoverished countries while simultaneously facilitating China’s strategic objectives both regionally and internationally. In the next decade, the Asian Development Bank has identified $8 trillion in infrastructure shortfalls across Southeast Asia, one of the most populous and poorly integrated regions in the world. This explains why Asean countries have been some of the earliest recipients of OBOR funds, with Chinese economic assistance kickstarting the construction of transnational transportation infrastructure and modern port facilities.

In northern Laos, a 417-kilometer-long high-speed rail network is being built with the assistance of Chinese investment and technical expertise, connecting the impoverished state to the economic hub of Vietnam, Vientiane. As part of OBOR, China has allocated funding for a further 2,700 kilometers of high-speed rail in Thailand, Malaysia, and Singapore as well as investing towards modern port facilities in Myanmar, Indonesia and Malaysia, linking the region’s rural populations and reinforcing economic integration across Southeast Asia. Undeniably tinged with political motivations, China’s investment in Southeast Asia will boost the regional economy, expand bilateral relations… and degrade the local influence of the United States.

Pakistan has also been among the first to benefit from OBOR, partnering with China to develop the China-Pakistan Economic Corridor (CPEC), a “flagship” project that focuses on upgrading and constructing energy, port and transportation infrastructure in Pakistan. A key fixture of CPEC has been the construction of the Gwadar Deep Sea Port, a critical trade terminus that promises to create a land route from China’s isolated Xinjiang Province to the Indian Ocean, reduce China’s energy import dependency on the Malacca Straits route, and increase China’s naval reach.

It is also hoped that China’s investment in Pakistan will have a stabilizing effect on neighboring Xinjiang province, which has been affected by ethnic nationalism and terror attacks. However, obstructions to OBOR projects in Pakistan have shown that the initiative is not inoculated against setbacks, which include India’s increasingly hostile political view of CPEC and the threat of regional militancy targeting infrastructure projects. China’s success in dealing with these setbacks, and any other future issues, will have broader implications for the long-term credibility of the OBOR initiative.

But what about Trump?

Even the US seems to be considering a role in China’s OBOR. In a surprising development, Trump backtracked on his widely publicized Sino-skeptical stance and sent a US representative to this month’s OBOR summit in Beijing. Trump’s implicit endorsement of the OBOR initiative may be an indication that his administration is taking a backseat in the Asia-Pacific, allowing Beijing to spearhead investment and infrastructure development in the region.

In the wake of the controversial US withdrawal from the Trans-Pacific Partnership (TPP) and lethargic engagement with institutions like Asean (Association of South East Asian Nations), more and more states, including major American allies like Japan and Australia, are slowly gravitating towards China. But the pull towards China is not restricted to countries either. American corporations are eyeing their potential profit margins and titans like General Electric are already vying for a seat at the table. For the next 18 months, GE is hoping to get US$7 billion in orders for natural gas turbines, up from $400 million in 2014.

For the United States, China’s OBOR initiative has become a multidimensional challenge, influencing domestic matters as well has international politics. Primarily, China’s focus on multilateral development projects has highlighted an uncomfortable domestic issue for Trump: the decrepit state of America’s civil infrastructure and Congress’s resistance to the allocation of the funds needed to address it. While on the campaign trail, Trump repeatedly touted a $1 trillion plan to rebuild and modernize America’s roads, bridges, schools, sewage systems, airports and dams.

America’s second-largest city, Los Angeles, epitomizes the state of America’s crumbling infrastructure. Despite hoping to secure the rights to host the 2024 Olympics, the city is held back because of its potholed and traffic-congested roads, an aging telecommunications system, and the lack of reliable public transport. Mayor Eric Garcetti even made a heartfelt plea to Trump’s transportation secretary, Elaine Chao, to fast-track a $1.3 billion package for the city’s subway line – but it’s unclear whether the administration will indulge him.

Worse, Congress shows little resolve to help Trump with his infrastructure plan, with many lawmakers expressing doubts that the US can afford such a massive expense at a time when the public debt is hovering around $22 trillion. If Washington refuses to cough up the money, could officials like Garcetti end up turning to Chinese funding instead?

The idea may not be as far-fetched as it sounds, but flirting with China’s initiatives in Asia or at home has far-reaching geopolitical implications. Instead of sidelining Beijing and embedding a US-led security and institutional architecture across the Asia-Pacific – like the TPP set out to do – Washington is actually laying the groundwork to follow China’s lead. By 2027, Goldman Sachs predicts that China will overtake the United States as the world’s preeminent economic power. As China broadens its commitment to initiatives like OBOR, will the international influence of a rudderless United States continue to decline?