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Maritime oil routes

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The ways of oil shipping

There are three types of oil shipping classification. The first is according to the way the ship operates, including regular and non-scheduled routes. Regular (scheduled) routes are mainly used to transport general merchandise and refer to specific ships. They go to specific ports at fixed dates and operate passenger and freight activities at standard freight rates.

Non-scheduled routes refer to temporarily selected routes based on freight transport needs. Vessels, sailing schedules, and ports of call are not fixed. These are routes that primarily operate bulk, and low-cost freight transport activities.

The second type is based on classifying by distance, including ocean and coastal routes. Ocean routes refer to long-distance maritime routes and ships that cross the great seas from the Far East to Europe and the Americas and vice versa.

The third type is based on classifying according to navigation, including Atlantic, Pacific, Indian Ocean routes and global routes as such.

Oil routes

Here are the main oil shipping routes.

West Asia (Strait of Hormuz) – Arabian Sea – Indian Ocean – Strait of Malacca / Strait of Lombok (60 kilometres long, 40 kilometres wide and 250 metres deep) – East Asian countries (People’s Republic of China, Japan, South Korea, etc.). The largest seaborne flows come from Middle East’s crude oil in the Persian Gulf. This route is the best way for East Asian countries to import crude oil.

I. West Asia (Strait of Hormuz) – Arabian Sea – Indian Ocean – East Africa – Strait of Mozambique – Cape of Good Hope – Atlantic Ocean – Western Europe / East coasts of the Americas. The water depth along the route has practically no restrictions on the type of ships and both supertankers (Very Large Crude Carriers) and mega-tankers (Ultra Large Crude Carriers) can sail freely.

II. Persian Gulf – Strait of Hormuz – Arabian Sea – Gulf of Aden – Bāb al-Mandab – Red Sea – Suez Canal – Mediterranean Sea – Strait of Gibraltar – Atlantic Ocean – Northern Europe – North America’s East Coast. Unlike the second route mentioned above, this one has a shorter shipping time, but due to the shallow draft of the Suez Canal, it is difficult for large ships to pass through and the cargo capacity is relatively small.

III. North African Mediterranean Sea – Strait of Gibraltar – Northern European countries (Antwerp, Rotterdam, etc.). Crude oil from Libya and other North African countries is mainly transported along this route.

IV. Atlantic route to Western Europe and North America.

V. West Africa via the Cape of Good Hope to East Asian countries.

VI. West Africa – Strait of Malacca – Taiwan Strait – mainland China. This route is used to transport crude oil from Angola, Nigeria and other West African countries to China.

VII. Caribbean route: Latin America – Panama Canal – American coast of the North Atlantic.

VIII. Route from the North Sea and South America to China, via the Cape of Good Hope.

IX. The East Coast of the Americas crosses the Atlantic Ocean, rounds the Cape of Good Hope and heads for East Asia’s countries; the West Coast crosses the Pacific Ocean and heads for Asia.

X. Route from South-East Asia to East Asia. This route is mainly for short-distance transport. The ships used are mainly Panamax tankers (ships whose size enables them to pass through the locks of the Panama Canal).

The geopolitical strongholds of Straits, Canals and Channels

Strategic maritime transport oil fortresses are an important part of global energy and geopolitical security. Let us take a closer look at them.

1. The Strait of Hormuz lies between Oman and Iran, connecting the Persian Gulf, the Gulf of Oman and the Arabian Sea (30 kilometres wide, with an average depth of 80 metres). It is one of the most important routes in the world. In 2020, it recorded an oil trade volume of 18 million barrels per day, accounting for almost 50% of the total volume of oil trade by sea for that year. According to BP Energy data, Qatar exported 3.7 trillion cubic feet of liquefied natural gas (LNG) through the Strait in 2016, accounting for over 30% of the world’s LNG trade.

2. Located between Indonesia, Malaysia and Singapore, the Strait of Malacca is a major transport route connecting the Indian Ocean, the South China Sea and the Pacific Ocean. The Strait is approximately 930 kilometres long, with a minimum width of 38 kilometres and an average depth of 25 metres. The number of oil tankers entering the South China Sea (from Singapore to neighbouring Taiwan) through the Strait of Malacca is three times that of the Suez Canal and five times that of the Panama Canal. It is the maritime lifeline of Asian countries. The Strait of Malacca is the shortest route connecting the Middle East and Asian markets including China, Japan, Korea and the whole Pacific. Oil shipments through the Strait rose to 16 million barrels per day in 2016, up from 14.5 in 2011, with crude oil accounting for 85 to 90 per cent, making it the second busiest outpost in the world.

3. The Singapore Strait follows the Malacca Strait to the southeast: it is 114 kilometres long and 16 kilometres wide, with an average depth of 22 metres. It forms a natural bottleneck in shipping, thus increasing the possibilities of ship collisions or oil spills. It has also become one of the last active areas for pirates. If the Strait of Malacca were to close, almost half of the world’s ships should get around Indonesia. This would affect global transport capacity, thus increasing transport costs and putting upward pressure on global energy prices. The volume of crude oil transported through the Malacca Strait accounts for approximately 15% of global consumption.

4. The Suez Canal is located in Egypt and connects the Red Sea and the Mediterranean Sea. It is a strategic route for oil and natural gas from the Persian Gulf to European and North American markets. It is the border between Asia and Africa and the most direct water passage between Asia and Africa and Europe. The total length of the canal is 193.3 kilometres; the width of the parallel canals is 205-225 metres, and the average depth is 22 metres. The maximum tonnage passing through it is 210,000 tons. According to the company Kpler-Leading Commodity Data & Analytics Solutions, 1.74 million barrels per day (bpd) of the 39.2 million bpd of crude oil imported by sea in 2020 passed through the Suez Canal. Due to depth limits, the Suez Canal cannot be crossed by super- and mega-tankers. When the Suez Canal Authority extended the depth of the canal to 66 feet in 2010, Suezmax ships – i.e. the ships whose size allows their passage through the Suez Canal – were created. It celebrated its 150th anniversary in 2019. Most of the oil flows passing through the Suez Canal goes north to European and North American markets, and south to Asian markets. Oil exports from the Persian Gulf countries account for 84% of the flows northwards. Russia’s oil exports account for 17% of the southbound flows, followed by Turkey, Algeria and Libya, which together account for 12% of the southbound flows. Total flows through the Suez Canal have been steadily growing since 2009, with increases in 2015 and 2016 reflecting increased OPEC production and exports. The 200-mile Suez-Mediterranean Transport Pipeline (Sumed) – inaugurated in 1977 and built by the Italian companies Saipem and Snamprogetti (ENI Group) and by Finsider’s Montubi and Cimi – transports crude oil from the Red Sea to the Mediterranean. The pipeline’s total capacity is 2.34 million barrels per day. When ships cannot navigate the Suez Canal, the Sumed pipeline is the only alternative route that can transport oil from the Red Sea to the Mediterranean. If the Sumed pipeline were to close, tankers should be diverted to the Cape of Good Hope at the southern tip of Africa, adding thousands of miles to shipments from Saudi Arabia to Europe and up to the United States of America.

5. The Strait called Bāb al-Mandab – meaning in Arabic the “Gate of Lamentation” or the “Gate of Tears” – is a maritime fortress between the Horn of Africa and the Middle East and a strategic link between the Mediterranean and the Indian Ocean. Located between Yemen, Djibouti and Eritrea, the Strait connects the Red Sea, the Gulf of Aden and the Arabian Sea. The Strait is approximately 26-32 kilometres wide and has a maximum depth of 310 metres, with some volcanic islands scattered between them. The island of Perim divides the Strait into two channels, the smaller of which, on the Asian side – known as Alexander’s Strait – is about 3.2 kilometres wide and 30 metres deep. The larger channel – known as Dakt al-Mayun – is on the African side, with a width of about 28.8 kilometres and a water depth of 323 metres, and it is hard to navigate because of the numerous reefs and rapids. As seen above, most of the oil exports from the Persian Gulf come through the Suez Canal and the Sumed pipeline via the Bāb al-Mandab Strait. In 2018, some 6.2 million barrels per day of crude oil and refined similar products passed through the Bāb al-Mandab Strait to Europe, the United States of America, up from 5.1 million barrels per day in 2014. In July 2018, two Saudi supertankers were attacked by Yemen’s Shia Houthi rebels (Ansar Allah), thus suspending oil shipments in the Red Sea, and raising market concerns about the safety of transport in the Bāb al-Mandab Strait. This communication crossing has become an important route for general maritime traffic also between the Pacific, Indian and Atlantic oceans. Some call it the strategic heartland of the world, as it is a busy sea route: the area is also a haunt for Somali pirates.

Closing the Strait would enable oil tankers from the Persian Gulf to reach the Suez Canal or the Sumed pipeline and then divert southwards to the southern tip of Africa. This would greatly increase transport time and costs.

6. The Turkish Straits, which include the Bosporus and the Dardanelles, separate Asia from Europe. The Bosphorus (from the Greek: “cattle strait” or “Ox-ford”) is a 31 kilometres long, 700 metres wide and 121 metres deep waterway connecting the Black Sea to the Sea of Marmara. The Dardanelles (the ancient Hellespont, known in Turkish as Strait of Çanakkale) is a 61 kilometres long waterway, with a 1.2 minimum width and an average depth of 60 metres. It connects the Sea of Marmara to the Aegean and the Mediterranean Sea. Both waterways supply Western and Southern Europe with oil from Russia and other Eurasian countries, including Azerbaijan and Kazakhstan. An estimated 2.4 million barrels per day of crude oil and oil products sailed through the Turkish Straits in 2016, over 80% of which was crude oil. Oil shipments through the Turkish Straits declined from the 2.9 million barrels per day recorded in 2011. Traffic through the two Straits has been steadily declining over the past decade. Oil shipments are likely to increase in the future as Kazakhstan’s crude production increases, since the country exports more crude oil through the Black Sea. The Turkish Straits are among the world’s most difficult waterways, with some 48,000 ships passing through them each year, making the area one of the world’s busiest maritime strongholds. Traffic congestion is indeed causing problems for oil tankers.

7. The Panama Canal is a vital route linking the Pacific Ocean, the Caribbean Sea and the Atlantic Ocean. The Canal is 82 kilometres long, 90/150-240/300 metres wide and 12 metres deep at most. The aforementioned Panamax cargo ships can usually carry 65-80,000 tonnes but, due to the Canal’s draft limit, its maximum cargo capacity is limited to about 52,500 tonnes and the rest of the cargo is transhipped.

Over 12,525 ships passed through the Panama Canal in 2021, carrying 287,486,205 tonnes of cargo. Alternative sea routes to the Panama Canal include the Strait of Magellan, Cape Horn and the Drake Strait at the southern tip of South America, but such choices would significantly increase transit time and costs. Although oil and petroleum products accounted for 30.1% of the main goods flowing through the Panama Canal in 2021, it is not an important route for such shipments. Northbound (Pacific to Atlantic) oil and refined products on this route account for a mere 6.9% of all cargo shipments; while 42.7% of refined and unrefined oil was shipped south from the Atlantic to the Pacific last year.

8. The Denmark Strait is the channel linking the Baltic Sea and the North Sea. It is 480 kilometres long and 290 kilometres wide at its narrowest point. It is an important route for Russian oil exports to Europe. In 2016 some 3.2 million barrels of oil products flowed through the Denmark Strait every day. After opening the port of Primorsk in 2005, Russia shifted most of its oil exports to Baltic ports. Primorsk’s oil exports through the Denmark Strait accounted for almost half of total exports in 2011, but fell to 32% in 2016. Small amounts of oil from Norway and the UK (less than 50,000 barrels per day) also flow eastwards through the Strait to Scandinavian markets.

9. The Cape of Good Hope lies at the southern tip of South Africa and is a major transit point for global tanker traffic. Crude oil shipments around the Cape of Good Hope account for about 9% of all oil traded by sea. The US Energy Information Administration estimated that the oil flows rounding the Cape of Good Hope in 2016 were about 5.8 million barrels per day, accounting for almost 9% of global seaborne trade. The Cape of Good Hope is another alternative route for ships sailing westwards to bypass the Gulf of Aden, Bāb al-Mandab and the Suez Canal, but with increased cost and transit time.

As can be inferred from the analysis above, blocking one of these fortresses is sufficient to harm a country or a well-defined geopolitical area. In such a case, thalassocracy would have more chances than a tellurocracy that disregards forward-looking alliances in view of probable scenario crises.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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Kurdistan – Britain Ties in New Momentum Driven by Energy Supply

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One hundred year before, despite world promise for Independent Kurdistan after post world war’s Ottoman division, Britain government’s decision to divide Kurdistan and merge it in new forming Iraq and Turkey, as well as bloodily suppressing the Kurdish rebel movement by using intense bombardment deprived the Kurds of their right to self-determination, built a historical aloofness between the Kurds and Britain, which has been deepened over time, and brought profound bilaterally distrust, it’s still lasting.

While, majority of people in Middle East (M.E) strongly still believe that Britain’s interests or intentions are in behind of most of the sufferings in this region, but Kurds found their fate directly changed by Britain policies in the M.E. Britain’s role in Iraq’s political and economical process of Iraq  by 1972 were main obstacle in Kurdish movements for independence. This policy continued then, with no proper reactance by Britain for Iraqi Baathi government’s violences against Kurds, such as chemical attacks and Infal (Massacre of more than 180,000 people) deepened these mutual reluctances, but Britain’s cooperation along with France and the United States in passing UN Security Council’s Resolution 688 to prevent a mass extermination of the Kurds by the Iraqi government in 1991, is unforgettable turning point in Britain’s approach toward Kurdish people.

Twelve years later, when international coalition, led by U.S, Overthrew Baath’s Saddaam Hussein in 2003, British forces focused on south of Iraqi province of Basra, where later in 2009, British giant oil, bp, signed its first oil contract in modern Iraqi era to develop the big field of Rumaila in cooperation with Chines CNPC. Four years later, British bp entered new cooperation with Iraqi federal for redeveloping oil fields in Kurdish city of Kirkuk, where first oil well in Iraq’s history were drilled by British led Iraq Petroleum Company (IPC) in 1927. Kirkuk, where known as heart of Kurdistan, is one of disputed regions between Kurdish government and federal government of Iraq, stipulated in Iraqi constitution (article 140) to be determined by a referendum, so far it has been postponed.

Meanwhile, despite British bp’s interest to Kirkuk, less than 100 km far from Erbil, KRG’s capital, lack of any British giant oil and gas companies’ desire to enter the projects in Kurdish administrated region, raise a doubt over Britain’s support for 2017’s October attacked by Iraqi federal forces on the Kurdish peshmerga’s bases in Kirkuk, in contrast to the close mutual cooperation in the fight against ISIS terrorism in Iraq.

When the distance between the Kurds and Britain was predicted to widen, bike-tour of Erbil streets by Kurdistan President and British ambassador to Iraq, in April 2021, dispatched positive pulses. The improvements in mutual relationship continued, when British foreign minister visited Erbil, June of 2021. Then, Kurdistan President’s visit of No.10 of Downing Street strengthened the ties, brought hopes for more developments.

Russian invasions on Ukraine, which highlighted Europe’s need for reform in Energy policies and diversifying energy sources, mainly for Natural gas supplies, made historical opportunity for Kurdistan, world biggest undeveloped oil and gas reserves. Kurdistan Region of Iraq own about 45 billion barrels of oil reserves and about 5.7 trillion cubic meters of natural gas, while the KRG’s oil production is still below 500,000 bpd and about 15 million cubic meters of natural gas. While Baath government of Iraq left Kurdistan oil and gas reserves undeveloped until end of its rule in 2003, Kurdish semi-autonomous government began development plan of its oil and gas, soon after 2007, when its oil and gas law was passed in region’s parliament. The semi-autonomous region’s oil production is over three OPEC members including Gabon, Congo and Equatorial Guinea, according to OPC Monthly Oil Market Report – April 2022.

Kurdistan government targeted fast raise in natural gas production to 725 million cubic feet by 2023 and more than one billion cubic feet by 2025, which enabled region to start export natural gas in next two years. Kurdish government president and prime minister recently visited regional countries, incising Qatar, UAE and Turkey to receive their support. In next step, Kurdish PM, Mr. Masrour Barzani, showed Kurdistan’s plan to develop the region’s natural gas production and infrastructures to export to Europe, through Turkey, during his Dubai Energy Forum. He also during his meeting at mid of April 2022, with Britain’s PM, Mr. Brouris Johnson, discussed Kurdistan’s interest  to connect region’s natural gas to international transmitting pipeline in Turkey, seems supported by British PM, a great chance for more development in mutual economical relationship.

Kurdistan’s ambitiously plan for fast development of its natural gas production to be supported by west, mainly US and UK in several categories. While KRG should internally conduct radical reforms in directing the sector, the international supports to be achieved against threatening of Kurdistan by Baghdad’s view on Kurdistan’s oil and gas sector, seeking to centralize its administration, which is needed to be resolved with federal government swiftly. International racing, is also vital for facing the regional and global competitor’s challenges, seems to be next step facing Kurdish natural gas project.

New era in Kurdistan and Britain ties sparked hopes to bring Britain’s support for Kurdistan’s oil and gas industry, not only technically, but also, politically. British companies would be welcomed in Kurdistan to participate in developing Kurdistan’s oil and gas plan, financially and technically supports. Also, Britain’s political support for Kurdistan’s natural gas, mainly, would be softening Iraq’s position against Kurdistan’s natural gas, which could back Britain’s strategy for diversifying UK and Europe natural gas sources.

The new turning point in Kurdistan and Britain is recently kicked off, would strengthen ties and raise hopes for strategical achievement, if Britain is ready to warmly shake the hands with Kurdish government, mainly for gas policy.

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The Development and Geopolitics of New Energy Vehicles in Anglo-American Axis Countries

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While the global development of green energy and industries has been an ongoing matter, the war launched by Russia in Ukraine adds a deeper geopolitical dimension to it. In this shift, the “Anglo-American Axis”, comprising the United Kingdom and the United States, may once again lead the way.

Take the UK as an example. In promoting green energy and green industry, and reducing its carbon emissions, a series of seemingly radical policies have been introduced in the past two years. The UK government released the “Ten-Point Plan for a Green Industrial Revolution” in November 2020, proposing the development of offshore wind power, in addition to promoting the development of low-carbon hydrogen, and providing advanced nuclear energy, accelerating the transition to zero-emission vehicles, among others. It also includes action plans for the reduction of 230 million tons of carbon emissions in the transport and construction industries in the next decade.

In the policy paper Energy White Paper: Powering Our Net Zero Future published in December 2020, the UK has planned for the transformation of the energy system, and strive to achieve the goal of ne-zero carbon emissions in the energy system by 2050. On the conventional energy front, it announced a phase-out of existing coal power plants by October 2024. Focusing on the fields of energy, industry, transportation, construction and others, it aims at reducing greenhouse gas emissions by at least 68% by 2030. Additionally, the UK has also launched the Emissions Trading Scheme (ETS) on January 1, 2021, setting a cap on total greenhouse gas emissions for industrial and manufacturing companies, with the objective of achieving a net-zero emissions target by 2050. In March 2021, it took the lead among the G7 countries to launch the Industrial Decarbonization Strategy, supporting the development of low-carbon technologies and improving industrial competitiveness. The plan is to significantly reduce carbon dioxide emissions from manufacturing companies by 2030 and build the world’s first net-zero emissions industrial zone by 2040.

In terms of public transport, there is the March 2021 National Bus Strategy, and a green transformation plan for the bus industry is proposed. In July of the same year, the Transport Decarbonization Plan is announced, further integrating low-carbon transformation in transportation such as railways, buses, and aviation, and promoting the electrification of public and private transportation. At present, there are more than 600,000 plug-in electric vehicles in the UK, and the production of new energy vehicles exceeds one-fifth of the total car production. In the nation’s new car sales for February 2022, electric vehicle sales accounted for 17.7% of the market, the market share of plug-in hybrid vehicle sales is 7.9%. Adding traditional hybrid vehicles, electric vehicles account for more than one-third of the sales.

On April 8, 2022, the UK government announced the annual development goals for new energy vehicles. It is stipulated that by 2024, all-electric vehicles must occupy 22% of the market. This proportion rises to 52% in 2028 and 80% in 2030. The country’s authority hopes that these mandatory policies will force carmakers to, by 2035, increase the share of electric vehicles in sales every year, when all models must achieve zero emissions. It will then ban the sale of new petrol and diesel cars from 2030 and hybrid cars from 2035, under plans unveiled two years ago.

As the world’s largest automobile consumer, the United States has also put forward the development plan for new energy vehicles. It should be pointed out that the marketization forces represented by Tesla have played a strong and spontaneous role in the U.S.’ development of new energy vehicles. On this basis, the supporting policies introduced by the U.S. government will have greater policy flexibility. After the Biden administration came to power, there are changes in the negative attitude of the Trump administration towards the new energy industry, and an agreement returning to the Paris Agreement has been signed. To achieve the goals of the Paris Agreement, the U.S. government plans to increase the sales of new energy vehicles (including plug-in hybrid, pure electric, and fuel cell vehicles) to 40-50% by 2030. The government and industry will provide subsidies for the purchase of these vehicles, improve the charging network, invest in research and development, and provide subsidies for the production of the vehicles and their spare parts. On March 31, 2021, the Biden administration proposed to invest USD 174 billion in supporting the development of the U.S. electric vehicle market, which involves improving the U.S. domestic industrial chain. It targets to construct 500,000 charging stations, electrify school buses, public transport, and federal fleets by 2030. In President Biden’s USD 1.75 trillion stimulus bill passed by the House of Representatives that year, there was a subsidy mechanism for new energy vehicles and additional subsidies for traditional American car companies.

Major U.S. domestic and international automakers, United Auto Workers, Alliance for Automotive Innovation, the California government, the U.S. Climate Alliance, as well as other industrial and governmental agencies have issued a joint statement and support the Biden administration to accelerate the development of the new energy vehicle industry, so as to strengthen the leadership of the U.S. in this field. On the basis of marketization, the strong support of the U.S. to the new energy vehicle industry will greatly promote the development of this particular market in the country.

Researchers at ANBOUND believe that the UK and the American strategies and series of policies for the development of new energy vehicles are not merely concerning industry and green development. Instead, they carry profound influence and significance. Chan Kung, founder of ANBOUND, pointed out that the policy signals given by the Anglo-American axis represent the shape of the things to come. The development of new energy vehicles is not a purely industrial or technological issue. It is conspicuous that such a development means alternative ways of energy utilization have emerged, and this energy revolution has its geopolitical implication, where both the UK and the U.S. will further ditch their dependence on Russian energy. If the future industrial system and consumer market are no longer dependent on oil, then Russia, which is highly dependent on oil resources economically, will be hit greatly in economic sense.

It should be pointed out that due to the complexity and extension of the transportation system, this revolutionary policy of energy substitution will also drive the rapid development of other industries, as well as related technological buildout and the manufacturing of new products. It will not take long for a new manufacturing system to emerge in the countries and societies of the Anglo-American axis.

Chan Kung emphasized that it is also worth noting that from a geopolitical perspective, this large-scale new energy policy is also a measure to share geopolitical risks and pressures. In the past, countries and governments had to address issues caused by geopolitical risks, such as rising oil prices and inflation. These in turn, could lead to political instability if the ruling government failed to address them well. However, the rapid development of industries such as new energy vehicles has made a great change in the situation. The pressure on the government was quickly directed to the private sector, industry, and society. To improve the quality of life, people are spending money to buy new energy vehicles. This is tantamount to common people spending money to solve the geopolitical risks of the Anglo-American axis countries and governments. Once this pattern and market system are formed, the Anglo-American axis countries will not only eliminate the pressure of Russia’s weaponization of energy, they can also generate profits from it, even form a new manufacturing system that can scrap their dependence on the manufacturing industry of third world countries and China. From this ideal logic, the development of new energy vehicles can serve multiple purposes for countries such as the United Kingdom and the United States.

Noticeably, unlike in China, the “electric vehicles” or “new energy vehicles” mentioned in the supporting policies of the Anglo-American axis countries do not have any specific type (such as plug-in hybrid, pure electric, fuel cell vehicle, etc.). This is actually a wise decision in the design of public policy. The technology part is a technical issue, not a public policy issue. Separating public policy from technical issues not only distinguishes the functions of policy and market, but also effectively reduces the influence of interest groups.

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China’s Contribution to Bangladesh’s Achievement of 100 Percent Electricity Coverage

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With the opening of a China-funded eco-friendly 1320mw’s mega power plant at Payra in Patuakhali district, Bangladesh became the first country in South Asia to achieve 100 percent electricity coverage. That megaproject is a centrepiece of Bangladesh and China’s Belt and Road collaboration. Bangladesh saved $100 million by completing the Payra Thermal Power Plant project ahead of schedule.

Prime Minister Sheikh Hasina also expressed gratitude to the Chinese president and prime minister for their assistance in the construction of the Payra power plant. She claimed that with the inauguration of the project, every residence in the country was now getting electricity and announced 100 percent electricity coverage with the inauguration of the 1,320 MW Payra Thermal Power Plant, the country’s largest of its kind.

She also remarked March – a month of Bengalese Victory, noting that her government was able to open the power plant during this month, which coincides with the “Mujib Borsho,” which commemorates the birth centenary of Bangabandhu Sheikh Mujibur Rahman and the country’s Golden Jubilee.

Chinese Ambassador to Bangladesh Li Jiming quoted on the inauguration ceremony that, “This project serves another major breakthrough in China-Bangladesh cooperation in the Belt and Road Initiative, another splendid symbol of China’s strong commitment to Bangladesh in its development.”

According to the State Minister for Power, Energy and Mineral Resources, Bangladesh has not undertaken such a large-scale, cutting-edge project in the last 50 years, and the Payra plant is Asia’s third and the world’s twelfth to use ultra-supercritical technology.

Bangladesh China Power Company Limited (BCPCL), a 50:50 joint venture between China National Machinery Import and Export Corporation (CMC) and Bangladesh’s state-owned North-West Power Generation Company Ltd (NWPGCL), developed the Payra Thermal Power Plant with $2.48 billion financing from China Exim Bank.

The power generation capacity has rocketed to 25,514 MW in February 2022 from 4,942 MW in January, 2009. Bangladesh is now ahead of India and Pakistan, among the South Asian countries that have brought 98 per cent and 74 per cent of their population under the electricity network, according to data from the World Bank.

Patuakhali district of Bangladesh is set to take the lead in the country’s economic growth following the opening of the country’s first coal-fired Ultra Supercritical Technology power plant in coastal Payra. Within the next 5-10 years, the area will become an energy hub.

The government is also planning to establish a special economic zone and an airport to realize its dream of developing the country, attracting investments to Payra, and establishing besides Kuakata as a world-class eco-tourism centre within the next two decades, according to State Minister for Power Nasrul Hamid, while this powerplant will ensure power coverage of this flagship dreams.

The plant will energize Payra port, which has the potential to become an important sea-based transit point on the Silk Route as well as a global trade hub, as the government plans to develop the region as one of the country’s major economic corridors by establishing direct road and rail connections between Dhaka and the rest of the country, as well as connectivity to Bhutan, china, India, and Sri Lanka. According to the port authorities, a full-scale functioning of the port will result in a 2% boost in the country’s gross domestic product (GDP).

Another active power project, The Barapukuria Coal Fired Power Plant Extension is a 275MW coal-fired power plant in Rangpur, Bangladesh is also developed by CCC Engineering and Harbin Electric. Bangladesh received a US$224 million loan from the Chinese private bank Industrial and Commercial Bank of China (ICBC) in January 2014 to expand the capacity of the 250 MW Barapukuria coal-fired thermal power station by 275 MW.

China’s SEPCOIII Electric Power Construction Corporation has also committed to collaborate with Bangladesh’s S.Alam Group to build coal-fired power facilities in Chittagong with a capacity of 1,320 megawatts, which are targeted to begin operations this year.

Bangladesh joined the flagship BRI in 2016, and its ties with Beijing have grown significantly in recent years as Bangladesh’s largest trading partner is now China. During Chinese President Xi Jinping’s visit to Dhaka in October 2016 different development projects worth around $20 billion were agreed.  Among which The Padma Bridge Rail Link, the Karnaphuli Tunnel, the Single Point Mooring project and the Dasherkandhi Sewage Water Treatment Plant are all slated to be finished this year. All of these china funded projects are expected to make a significant contribution to Bangladesh’s economic growth in order to meet the country’s goal of becoming a developed country by 2041.

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