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New energy projects under CPEC: Chinese currency to be used instead of dollar

Instead of US dollar, use of RMB will be a major development if this agreement turns into reality. Now a summary will be moved before the Economic Coordination Committee (ECC) of the Cabinet for getting formal approval to this effect.

By Our Correspondent
November 05, 2019

ISLAMABAD: Pakistan has agreed with China for allowing utilisation of Chinese currency RMB for execution of all new projects of energy sector under multi-billion dollars China Pakistan Economic Corridor (CPEC).

Instead of US dollar, use of RMB will be a major development if this agreement turns into reality. Now a summary will be moved before the Economic Coordination Committee (ECC) of the Cabinet for getting formal approval to this effect.

Top official sources confirmed to The News on Monday that Joint Working Group (JWG) agreed to use RMB for all new energy projects in Pakistan. The JWGs meetings held last week between Pakistan and China teams prior to upcoming the Joint Coordination committee (JCC) meeting scheduled to be held in Islamabad today (Wednesday).

In the wake of ongoing Azadi March, the government has brought changes in the schedule of Joint Coordination Committee (JCC) meeting under CPEC and now the meeting will be held on Tuesday (today). Earlier, the JCC was scheduled to meet on November 6 here in Islamabad.

Top official sources confirmed to The News on Monday night that the Senior Officials Meeting (SOM) will be held on Tuesday morning and then JCC will be held in the afternoon. Both sides will sign MoUs after the JCC meeting. It is also expected that China’s visiting NDRC Minister and Minister for Planning will also hold joint press briefing on Tuesday night.

In the JWG meeting, Pakistan and China evolved consensus that RMB would be used for making arrangement to execute all new projects of energy sector under CPEC. This important development was also shared in a roundtable organised by Pakistan China Institute (PCI) led by Senator Mushahid Hussain Sayed in Karachi on last Sunday.

The delegation of parliamentarians and media persons also participated in this roundtable. The MPs team was on three-day visit to witness different CPEC projects completed at Port Qasim and Islamkot, Thar.

The delegation was comprised of Dr Shezera Mansaab Ali, PML-N MNA, Rusksana Zuberi, PPP Senator, Krishna Kumari, PPP Senator, Sikandar Manadro, PPP Senator, Nauman Wazir, PML-N Senator and Lt Gen (R) Abdul Qayyum. HUBCO CEO Khalid Mansoor, Power China’s CEO Gauo Gaungling, ICBC CEO and representatives of Pakistani businessmen such as Munir Kamal, Farhan Talib from Habib Bank Limited (HBL), President National Bank of Pakistan Arif Usmani, Shahid Ali Habib and Daraz Pakistan head Ahsan Saya.

The HBL’s head corporate and investment Farhan Talib informed during the proceedings of roundtable organised by PCI that the HBL branch in Urumqi got licence of dealing in RMB currency a few days back. Farhan Talib, who had earlier served in Urumqi branch for several years, said that problems were resolved after which the projects were delivered on the ground but keeping in view his experience for working in China showed that Pakistan borrowed in US dollar and not in RMB so it should be resolved for moving towards the second phase of CPEC. He said that HBL opened its branch in Gwadar but the Customs’ WeBOC for clearing of imports and exports was not operational. The representative of ICBC asked for allowing RMB use in Pakistan as it could help accelerate the CPEC projects. He said that the volume of ICBC increased by 100 percent in 2019.

Hubco CEO Khalid Mansoor said that energy mix was the major problem for Pakistan but now time had come when Pakistan would have to increase its dependence on indigenous coal. He praised China for helping Pakistan execute power projects through use of local coal when nobody was ready to finance coal projects at international levels. He said that the government would have to give sovereign guarantees and ensure repayment of outstanding dues against purchase of power because delay on this account would result in financial problems for all projects under CPEC.

NBP President Arif Usmani said that there was need to place one window for successful CPEC and mentioned that one Chinese company came which was trying to get 100 acres of land for establishing manufacturing unit. He said that they had not done enough to promote agriculture loans.

Senator Mushahid Hussain Sayed who is also head of think tank Pakistan China Institute said on the occasion that CPEC is future of Pakistan as China gave vote of confidence in shape of CPEC when no western or even Muslim countries were ready to invest in Pakistan but China made commitment to invest $50 to $60 billion in Pakistan. He said that 22 projects for energy through early harvest programme were devised out of which 9 projects were completed while 13 projects were underway or nearing completion. He said that the second phase of CPEC would be materialised as the upcoming JCC meeting was going to meet in Islamabad identified 27 projects of social sector as China had announced $1 billion grant to this effect. He said that currently 28,000 Pakistani students were studying in China and both the countries had agreed to provide 20,000 scholarships for Pakistani students for studying in China over next three years.

Senator Nauman Wazir praised the power project undertaken by Engro with Chinese assistance of $2 billion for production of 660MW at Thar through local coal.

When the IMF high-ups were contacted on Monday night they were of the view that they did not know about anything on this development. They said that the IMF had already made Chinese currency as part of its basket into SDR (Special Drawing Rights) . They said that they did not see any problem but the official version could not be shared so instantly without fully analysing its impact.