In a strategic move aimed at enhancing its energy exports and strengthening international trade relationships, the Pakistani government has initiated a feasibility study on establishing electricity transmission lines to China. The study will be conducted in collaboration with the Chinese firm Three Gorges, a major player in global hydropower development.
The decision to explore this potential export route was made during a meeting chaired by the Minister for Planning, Development, and Special Initiatives, Ahsan Iqbal. The primary objective of the meeting was to finalize a “wish list” for presentation to Russian officials during an upcoming high-level visit to Moscow.
The Minister for Planning, who recently visited China to discuss bilateral issues, highlighted the importance of this initiative. He was accompanied by delegations, including the Finance Minister and Power Minister, who engaged in detailed discussions about various energy and financial matters concerning Pakistan.
Special Assistant to the Prime Minister on Foreign Affairs, Syed Tariq Fatemi, elaborated on the meeting’s purpose, which was to develop effective strategies for the upcoming Russian visit. He emphasized the need to improve connectivity and security measures for convoys through road routes, suggesting that the Ministry of Interior should take the necessary actions.
In addition, the Secretary of Railways presented key rail routes to connect with Russia and Central Asia:
- Upgradation of the Quetta-Taftan Rail Network: A Memorandum of Understanding (MoU) was signed on June 7, 2024. A bilateral meeting is anticipated by the end of July to operationalize this MoU and explore cooperative opportunities.
- Kohat-Kharlachi Rail Network: This route aims to connect Central Asian countries through Afghanistan, with its feasibility study already completed.
- MinLink Express (MLE): This proposed route would link Riqo Dik to Gwadar, providing a direct and cost-effective route to the Arabian Sea, which is expected to significantly reduce transportation costs for minerals to markets in Azerbaijan and Russia.
The Minister for National Food Security & Research/Industries & Production endorsed the proposal of the Special Assistant on Foreign Affairs, suggesting that existing and future plans for bilateral negotiations with Russia be presented comprehensively.
In discussions with the State Bank of Pakistan (SBP), the Minister for Planning explored potential trade and business avenues with Russia. The SBP highlighted that while banking transactions with non-sanctioned entities are feasible, caution is required due to the sanctions regime and FATF-related compliance issues. The bank suggested exploring a barter trade mechanism to facilitate bilateral trade with Russia, similar to practices adopted by Turkey, BRICS countries, and others.
The Additional Secretary (Europe) from the Ministry of Foreign Affairs briefed that a report on different countries’ trade mechanisms with Russia will soon be shared with the Ministry of Petroleum Development & Strategic Initiatives. Tailored solutions for trade with Russia are being developed, and the Minister for PD&SI emphasized the preparation of three key documents: a government-to-government framework, business-to-business cooperation proposals, and a mechanism for safe trade and business operations.
Concerns were raised by the Minister for Petroleum regarding the underutilization of cheaper Russian oil, which has not benefited the general public but has instead enriched the private sector. There is a call for government refineries to leverage Russian oil to provide public benefits.
Addressing funding for mega hydel projects, the Minister for PD&SI expressed concerns about WAPDA’s role in securing finance. The suggestion was made to form a consortium of financiers to bridge the funding gap.
Additionally, the Ministry of Foreign Affairs proposed aligning the proposed Russian delegation visit with the upcoming Inter-Governmental Commission (IGC) meeting, scheduled for September 2024.
On the industrial front, the Minister for MNFS&R/I&P discussed Pakistan Steel Mills (PSM) and the establishment of an Export Processing Zone (EPZ) on its land. There are plans for a new steel mill in Sindh, which could be linked with Russian interests.
Finally, the Director-General of the Private Power and Infrastructure Board (PPIB) suggested utilizing Russia’s expertise in high-altitude and cold-weather conditions to assist in laying power evacuation lines for ongoing hydel power projects.
This strategic planning underscores Pakistan’s commitment to enhancing its energy sector and international trade relationships, aiming to leverage new opportunities for economic growth and development.
