The development of the Gwadar city and port area is a long-term project. Where the city is today is certainly not where it will be tomorrow. But five years have passed since China Overseas Ports Holding Company assumed control over the port from Singapore’s PSA International. And it’s been about three years since the formal launch of the China-Pakistan Economic Corridor. So it’s worth revisiting how the city is faring with respect to many of its core issues, including electricity, water, and port activity. Here’s a brief overview of some recent developments:

  • In January 2018, the Gwadar free zone hosted its first trade expo. The commercial logistics zone of the free zone was launched and two new grand buildings were opened: a business center and an exhibition hall. The expo itself, however, did not offer any indication of significant industrial activity being on the horizon.
  • In March 2018, the COSCO Shipping commenced operations of a new container shipping line that makes calls in Gwadar. As a result, Gwadar now has regular — albeit very modest — container traffic. This is a feeder line between Karachi’s Port Qasim and Jebel Ali that makes calls in Gwadar (only en route to Jebel Ali) once every two weeks.
  • Gwadar’s water woes continue, but could be meaningfully addressed by the end of this year. Large dams have been built to supply drinking water to the city, but there has been little-to-no rainfall over the past three years to fill those resevoirs. The city has a daily water shortage of 4 million gallons a day (4 MGD). However, by the year’s end, a 4.4 MGD desalination plant is expected to commence operations. The project is led by the Pakistan Army with the financial assistance of the Emirati and Swiss governments.
  • Gwadar presently has limited electric supply. The city’s households receive a portion of the 70MW supplied to Balochistan via Iran. The free zone is currently powered by a 7.8MW captive power plant. Initial plans for a coal power plant in Gwadar were axed some time in 2016-17, due to environmental concerns. Given plans to develop the area as natural gas hub, the proposed coal power plant was replaced with an RLNG-fueled plant. Now authorities in Pakistan have since reverted back to a coal power plant option. Pakistan’s federal electric power regulatory authority is expected to soon issue an upfront tarrif for a 300MW coal power plant. Local residents will reportedly be provided with electricity free of cost.
  • The Eastbay Expressway — a crucial connectivity project that provides dedicated highway access for the Gwadar port traffic bypassing the intra-city thoroughfares  — appears to be finally moving. Ground was broken for the project in November 2017, roughly a year after construction was scheduled to begin. This coming fiscal year, around USD 50 million has been budgeted for the USD 140-150 million dollar project — indication that it is unlikely to be completed in 2018 as Pakistani officials have claimed. And by the middle of this year, construction of the new Gwadar International Airport is expected to begin, but Islamabad expects to receive only around USD 9 million of the nearly USD 200 million Chinese government grant in FY 2018-19, which means that the project will probably continue to experience delays.
  • Most importantly, Gwadar remains a poor area, with low levels of literacy and skilled labor, compared to Pakistan’s present industrial centers. China has provided education and health sector assistance in Gwadar, building a hospital and a school. A vocational school as well as other learning institutions are planned for the city. What is needed, however, is a comprehensive, long-term plan for improving the indigenous population’s living conditions and access to opportunity. Their upward mobility has to at least be on par with the city’s pace of growth. Job quotas and wealth redistribution (for example, a tax on luxury housing that forms part of a dividend or universal basic income for natives of Gwadar) can accelerate the improvement of human development conditions. Additional short-term, fast-track measures could include: training local youth in fields like hospitality and information technology services, and providing residents of Gwadar with small business grants or interest-free loans.

This, in brief, is the present condition of Gwadar. But it certainly does not mean that the city is shackled to this fate. In fact, if Gwadar’s development through CPEC is done right — for example, with social interventions and market forces working in synergy — these structural issues, including poverty, can be resolved.

Posted by Arif Rafiq

Arif Rafiq is the editor of CPEC Wire. He is president of Vizier Consulting, LLC, a political risk advisory company, and a non-resident fellow at the Middle East Institute. Rafiq authored the first comprehensive public study on CPEC, "The China-Pakistan Economic Corridor: Barriers and Impact," published by the U.S. Institute of Peace. He can be reached via email at [email protected].

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