Chapter.5.

Conclusion.
This research is based on “ The impact of CPEC on the energy sector of Pakistan”. It means that
how investment under CPEC would boost the energy supply to the consumers in Pakistan.
Because, Pakistan’s energy infrastructure is not good that birth to energy crisis in the country.
Unfortunately, after partition of sub-continent Pakistan had inherited only 60MW total installed
capacity of electricity for a population of 31.5 million, yielding 4.5 units per capita consumption.
The government of Pakistan had taken initiatives got control over KESC in 1952 and established
WAPDA in 1959, these increased the energy production capacity to 119MW. The progress
witnessed a new life to the social, technical and economic structures of the country, mechanized
agriculture started, industrialization picked up and general living standards improved in another
decade the generating capability. The task of accelerating the pace of power development picked
up speed and by 1970, rose from 636MW in 1965 to 1331MW with installation of a number of
thermal and hydel power units. In the year 1980 the system capacity touched 3000MW which
rapidly rose to over 7000MW in 1990-91. From 1990/91 to 2004/05, Pakistan’s total installed
power generating capacity increased nearly threefold, from 7000 MW to 17,500 MW with thermal
power units producing 64% of that total, while total hydel power installed capacity is 7,115MW.
So, total installed capacity of electricity in Pakistan is 24857 MW. However, total per day
production of electricity in Pakistan is 17,000MW and the demand is round about 22,000MW. In
order to this regard per day electricity shortfall is increased to 6000-7000MW. The increase in
shortfall in Pakistan has many causes; the government did not take any serious efforts to install
new capacity of generation. Moreover, rapid population growth, industrial development and
electricity demand , transmission losses due to outdated infrastructure, power theft and seasonal
reductions in the availability of hydropower, circular debt and so on have worsened the situation.
This is happening in such country where the large natural sources of producing electricity is
present. The government finds it a bit difficult to solve out this issue. In fact, Pakistan is a
developing country, and the Government in its new budget for the fiscal year 2014-2015, has
allocated $340 million to its energy development according to federal development
program(FDP). While, this budget is very little to eliminate that high 7000MW shortfall of energy,
because the average cost of installation of 1MW is approximately $1.5million. So, then the
government of Pakistan started struggle to seek foreign direct investor, to invest in energy’s
infrastructures to make it efficient and sustainable. That’s why Pakistan and China inked an
agreement in the shape of China Pakistan Economic Corridor(CPEC) in 2015, when Xi Jinping
visited here. This is a huge investment of more than $46billion, more than $33billion of this project
would invest in energy projects.
After declaring china by Chairman Mao Tze Tung as people’s republic of china, Pakistan was the
mere Muslim country who acknowledged it in 1949. The diplomatic relations between the two
countries established in 1951. While, good friendly relations between the two countries started
subsequently when they signed border agreement in 1963. But, when Xi Jinping visited Pakistan
on April 2015, the relations between the two countries leap up to strong regional connectivity.
They signed CPEC a project of more than $46billion. The project is roughly divided into three
main categories, which are the transportation networks, energy projects, and creation of trade
zones. As far as the energy sector is concerned more than $33 billion worth of projects are planned
to be constructed in the country. The initial target was to fight off the shortfall of roughly 6000-
7000MW until the end of 2018 by adding about 10,000MW energy into the grid through a series
of developments labelled as “Early Harvest” projects. The total installed capacity of the projects
was listed as 17,045 MW. It was also agreed to ensure the projects operational by the agreed
timeline, 2030. It aims to eradicate the energy crisis of Pakistan, to make it sustainable. This
energy crisis from a long time is one of the major hurdles in the economic growth of the country
as from years the shortfall of energy keeps on growing despite multiple efforts made by different
governments. There are a total of eight projects in Punjab, four in Sindh, two shared between
Punjab and Sindh, two in Balochistan and one in Khyber Pakhtun Khan being constructed under
Early Harvest policy. The major sources being considered for long-term development of
electricity in the country include hydropower, coal, liquefied natural gas, wind power and solar
plants. Predominantly, these projects will be tentatively completed within three to 15 years. The
projects that are aimed to be constructed will be developed by Independent power producers,
instead of the governments of the two countries and Pakistan’s government will be contractually
obliged to buy electricity from them. The major bank involved in financing the projects is China’s
Exim Bank(CEB). This investment will impact greatly on the energy sector of Pakistan and will
bring sustainable energy development by 2030.
As far as energy policy is concern, self-sustainability and sufficiency can only be attained if the
emphasis is made towards fixing the demand-side issues. Even if more power plants are
constructed and implemented, there cannot be a long-term solution to address the energy crisis,
unless Transmission and Distribution losses are reduced, equipment is overhauled and
indigenous resources are preferred as opposed to costly-imported sources of energy. On the
other hand, the hydel power should be focused for long-term energy solution, the supply side
needs to be made effectual. This can be achieved by introducing an effective one-window portal
for all the investors alike and by implementing consistent power policies, including but not
limited to those related to tariffs and sovereign guarantees.