Chinese & Pakistani construction companies agree to a joint venture worth USD 1 billion

BEIJING, March 10 (APP): China Energy Engineering Company (CEEC) and Zahir Khan Brothers (ZKB) Construction Company in a meeting have decided to work together and form a joint venture to take advantage of a large number of opportunities in the construction sector in Pakistan.

In a meeting, hosted by Commercial Section of Pakistan Embassy, Beijing, it was discussed that there will be more than US$2 to 3 billion of projects in road infrastructure sector in this year, and the joint venture between two construction giants will target around US$1 billion of projects, Commercial Counselor, Badar uz Zaman said on Wednesday.

“Similarly, there will be many projects in the special economic zone construction and different factories construction and other buildings and their estimation is around more than $2 billion. So, the joint venture having a great experience in the building sector has also agreed to work together,” he told APP.

He said as both of the companies specialize in the road construction projects, and they have a strong record particularly the CEEC has done many projects overseas. And similarly, ZKB has also played its role in the large construction projects in Pakistan.

In the backdrop of the construction package announced by Prime Minister Imran Khan and a lot of growth in the construction sector, the joint venture and the memorandum of understanding between the two companies will enable their participation into many construction projects.

The commercial counselor pointed out that Pakistan is experiencing a strong growth in the construction sector and there has been record uplift of the cement in the country last month, adding, “The monthly uptake of the cement is around six million tonnes. Similarly, the steel industry is also operating at its full capacity and nowadays, the construction industry is at its peak as well.”

In the Punjab, he said, there will be more than $400 million worth of water related projects this year. And these projects will also be targeted. And many of these projects are the Asian Development Bank and other multilateral funded.

Badar uz Zaman said there is also a peak that has been observed in the construction sector from the private sector. So many developers have started many new projects in this year.
He informed that there is a strong trend of construction of high rise buildings, and both the companies have specialization of the construction of the high rise buildings.

“So, they agreed to introduce the skyscrapers in Pakistan similar like China because the high urban population density, there is space limitation in cities,” he added.

Prime Minister Imran Khan has already underlined to raise the cities vertically to meet the problems of transportation and communication faced by the dense populated areas.

He said large cities including Karachi are also facing the water elated issues like the distribution of fresh water and tankers. Sometimes, the distribution is done through tankers. So, the pipelines are required to be laid from home to home and to the factories.

The cities like Karachi, Lahore Hyderabad and Faisalabad face flooding during rainy weather or monsoon. So, in the meeting, it was discussed that the fresh water and wastewater related projects have to be executed on urgent basis, so that this flooding problem can also be overcome, he added.

The commercial counselor informed there is a strong support in the construction projects that is coming from China Pakistan Economic Corridor (CPEC) related projects, and both countries, China and Pakistan have increased their efforts to materialize CPEC projects, very quickly.

Pakistan being the all weather strategic cooperative partner of China, there is a very strong urge in the Chinese companies to not only act as EPC contractors, but they are also very keenly observing the public private partnership related projects. And they also have a very strong interest in the build operate and transfer related projects, he added.

The CEEC has also seen a restructuring and after that its three arms will be very active. One of their subsidiary company will be focusing on the overseas investments. And the second company, is already very active in Pakistan, and they will be focusing on the thermal power generation related projects, and the grid constructions and the transmission lines.

He said a number of new power generation projects have been commissioned in Pakistan but still the country faces the power distribution problem. The CEEC has committed to play its role in this area, and be active in the power distribution related projects.

China Gezhouba, a subsidiary of CEEC, is already in the process of construction of Suki Kinari and Azad Pattan hydel projects. And in past, they have constructed Neelum-Jhelum project.

Most economists estimate the construction value to stand between 10% and 12% of the total gross domestic product. As, it provides stimulus to over 42 ancillary sectors including aluminium, brick, cables, cement, fixtures, glass, kitchen and bathroom fittings, marble, paint, steel, tiles, transportation, warehousing and wood.

Therefore, it has a far-reaching impact on the overall economy as it employs eight percent of the total labour force. Based on this estimation the total construction to take place in country shall value around Rs5,000 billion ($30 billion) in year 2021.