Chinese Power Company First to List on Pakistan Stock Exchange, as Beijing Seeks to Challenge “Debt Trap Diplomacy” Reputation

On October 27, reports emerged that China Three Gorges South Asia Investment Limited (CSAIL,) an investment holding subsidiary of China Three Gorges Corporation, is planning to list on the Pakistan Stock Exchange (PSX) during the second quarter of 2021 (having been delayed from a 2020 listing due to the pandemic).  If realized, this would be the first listing by a Chinese company on the PSX in a move that is being characterized as a Chinese effort to involve Pakistani investors in the equity upside of its economic engagement with Pakistan.

According to sources close to the decision, CSAIL’s plans are aimed at subduing its reputation of engaging in “debt trap diplomacy” that has dogged its efforts in the country to date.  Indeed, CSAIL’s IPO on the PSX is intended to signal that the company is willing to have the public invest in the country’s upside.  The PSX listing is also seen as a prelude to a larger planned debut on the Hong Kong Stock Exchange.

CSAIL is active in Pakistan’s renewable energy sector. The company is responsible for six standalone energy projects in Pakistan, which include: the 1,100 MW Kohala Hydropower Project, the 720 MW Karot Hydropower Project, the Mahl Hydropower Project, and two wind projects, the 100 MW and Three Gorges Second and Third Wind Power Projects.

CSAIL’s three hydropower projects are all situated along the Jhelum River in the Kashmir Valley, where water resources are disputed with India.  CSAIL’s projects along the river have exacerbated these tensions between the two countries.  Projects such as the Kohala hydropower plant have also raised local concerns about environmental damage and agricultural sustainability.