Impact Of Chinese Energy Sector Investments On Pakistan's Electricity Crisis:An Analysis Of Power Transmission Losses And Energy-Mix

The China-Pakistan Economic Corridor(CPEC)is one of the six corridors encompassing China's Belt and Road Initiative(BRI).The commencement of CPEC has led the World Bank to brush-up its economic forecasts for Pakistan's economic growth;from 5.4%annual GDP growth to 5.8%GDP growth.However,these improved forecasts are still below par,owing chiefly to the energy crisis in Pakistan;the energy crisis roughly shaves off 2%annually from Pakistan's Gross Domestic Product(GDP)growth.An estimated 60%of the overall Chinese infrastructure investments in Pakistan are allocated towards revitalizing the electric power sector of Pakistan to create a win-win scenario both for Pakistan and China,which is one of the prime principles of Xi Jinping's belt and road initiative.The Chinese energy sector infrastructure development investments are not slim,they are equivalent to roughly 20%of Pakistan's GDP;Thus,making it prudent to study the impact of these hefty investments on the energy quagmire of Pakistan.Since all the energy projects are in the development phase,thus limiting possibilities of impact?forecasting to theoretical means and using the case study approach of quantifying qualitative arguments to deduce evidences.The study,derives these primary evidences by first conducting a meta-analysis of the current literature and then utilizes Spearman's rank correlation technique to provide statistical evidences.The results achieved from these correlations are significant as 47 percent studies indicated that,"lack of proper planning"can be a probable cause of hindrance for Chinese investments to not fully eradicate the energy crisis in Pakistan,64 percent indicate electric transmission losses as a hindrance,while 64 percent indicate the Chinese investments will bridge the problems of an unsustainable energy-mix and economic problems and 82.3 percent indicate towards Chinese investments aiding in the possible resolution of the energy crisis.The correlation coefficient values achieved for these predictions are also significant.The current research goes on to further check why the variable"electric power transmission losses"can be hindrance by economically measuring their impact on the economy of Pakistan and their significance,using the Generalized Methods of Moments(GMM)technique while the significance of making Pakistan's energy mix sustainable is also checked through the GMM technique as Pakistan's current energy-mix is dominated by the use of furnace oil for electric power generation which is an extremely expensive source electric power.The aspect of checking how significant a role the Chinese investments will play in making Pakistan's energy mix sustainable and in return easing Pakistan's energy crisis are gauged by identifying if Pakistan's current GDP growth is BOP constrained using Auto-Regressive Distributed Lag(ARDL)techniques.The results of the GMM technique and that of the ARDL model reveal that,furnace oil used as a major source electric power generation is not economically prudent for Pakistan and induces a BOP constrain on Pakistan's economic growth which has been highlighted using the ARDL model.Thus the results achieved through the meta-analysis indicating that,the Chinese investments will aid in making Pakistan's energy-mix sustainable will have a compounding positive impact on the overall economy thus freeing up funds which the Government of Pakistan can utilize for easing the energy crisis in Pakistan.The resuts achieved through the GMM technique validate the findings of the statistical meta-analysis that,line losses can be a probable hindrance for the Chinese investmelnts in their bid to ease Pakistan,s energy crisis as the electric power transmission losses are found to be significant.The results of the meta-analysis are further validated through the results achieved through the Long Range Energy Alternatives Planning software(LEAP).Historical data has been computed through LEAP to yield resulhs that,match the results of the meta-analysis,concluding that,due to Chinese electric power infrastructure investments,Pakistan's energy-mix will become sustainable and less dependent on furnace oil as a fuel source.Secondly LEAP forecasts that,transmission losses will continue to grow if investments are not directed towards up grading the electric power system in Pakistan.Which is why the current research proposes that the policy planners on both sides need to allocate funds towards upgrading Pakistan's current electric power transmission setup to reduce losses and ensure a win-win scenario for both China and Pakistan.