Central Asia set to fast-track $121b development projects
High-profit opportunities for foreign investors in the power sector
The finance ministers of 11 Central Asian countries last week decided to fast-track the completion of more than $121 billion worth of projects in order to become one of the largest global economic zones.
These plans include $94 billion worth of new energy projects to meet the growing demands for electricity. When these projects come on stream, they will help boost industrial output for export to regional and international destinations.
The Asian Development Bank (ADB) commissioned a study which was presented at the Energy Investment Forum at the Islamabad ministerial conference. It says that the Carec (Central Asia Regional Economic Cooperation) countries have identified power investment needs of about $94 billion until 2023.
The financing gap that the private sector has to fill in the same period amounts to about $38 billion. The study identifies "specific opportunities for private investment in Central Asian countries."
Wencai Zhang, vice-president of ADB, said: "In order to ensure a secure supply of energy, a substantial amount of investment will be needed over the next 20 to 30 years."
There is an opportunity for foreign investors, including those from the UAE and Saudi Arabia, to invest in secure and high-yielding energy projects across Central Asia.
Another study completed in 2009 shows that "in order to keep its current rate of economic growth, Asia will need $8.3 trillion in infrastructure investment. Specific to Central Asia, about $170 billion is needed in energy, $100 billion in transport, $80 billion in telecommunication and $25 billion for water and sanitation."
"So, high-profit opportunities abound for foreign investors in this region," Pakistan finance minister Ishaq Dar, also chairman of the ministerial conference, told Khaleej Times.
In view of the gap between available funding and Carec's financial needs, the private sector has a key role to play, Zhang said.
Shajhan Mirza, managing director of the Pakistan Private Power Investment Board, highlighted investment opportunities offered by Pakistan's electricity sector. He said: "Our hydro potential of 60,000 megawatts and over 185 billion tonnes of coal reserves, mainly in the Thar area, offer huge opportunities to investors."
Carec, established in 2001, is implementing its 20-year development plan covering 2001-2020. It consists of 11 members: Afghanistan, Azerbaijan, China, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, Uzbekistan and Georgia. The ministerial conference was hosted by Prime Minister Nawaz Sharif.
Six multi-national institutions support the Carec, including the ADB, United Nations Development Programme, International Monetary Fund, World Bank, Jeddah-based Islamic Development Bank and European Bank for Reconstruction & Development.
The progress of several projects being implemented across the region was monitored. The key ones include: Carec Railway Development Strategy-2016, the Regional Food Safety Initiative, Astana-Bishkek Corridor, mid-term review of Carec-2020, establishment of Carec Institute and Railway Strategy for Carec.
Out of the total $27.7 billion Carec investment so for, $9.9 billion or 36 per cent was financed by ADB, a senior officer of the Manila-based multinational bank told Khaleeej Times. He said other donors had invested $10.9 billion while $6.9 billion was contributed by Carec governments. Of these investments, transport got the major share with $8 billion or 78 per cent.
Zhang said: "There are huge financing requirements in Carec for transport and trade facilitation, for which 108 projects have been identified at an investment cost of $38.8 billion for the period 2012-2020. Investment for the priority energy sector projects will be $45 billion in this period."
Ideas discussed include facilitating the region's potentially huge trade volumes, establishing banking chains, close cooperation in civil aviation and foreign exchange earnings to create jobs to reduce unemployment and poverty.
The Carec region, including its own six corridors, is being built alongside the Central Asian countries. At the same time, the under-construction $51 billion China-Pakistan Economic Corridor (CPEC) is being completed speedily. In a short while, the two regions will connect with the UAE and Saudi Arabia in the south, Iran in the southwest and with Turkey and Europe in the West.
The key projects of Carec are slated to be completed by 2020, while under the 'Early Harvest' plan of CPEC, most projects will be ready by 2018. The whole of CPEC is projected to be implemented by 2030.
Sharif underlined how the Carec region will "also benefit from the China Pakistan Economic Corridor and the dream of development will become a reality."
He appreciated "the progress made by Carec so far" and urged "boosting this regional cooperation a lot more." "Pakistan offers all assistance to achieve Carec's efforts to reduce poverty and speed up economic and social development of the region's people," he said.
Dar said the CPEC would complement the regional connectivity initiatives of Carec. "Once the six Carec corridors and mega ports, now under construction, start operating, they will provide access to global markets. They will deliver services that will be important for national and regional competitiveness, productivity, employment, mobility and environmental sustainability. All of us should gear our national policies to achieve these targets."
The writer is based in Islamabad. Views expressed are his own and do not reflect the newspaper's policy.
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