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Tuesday January 25, 2022

$12 bn projects under CPEC Pakistan seeks end to stumbling blocks

November 10, 2021

ISLAMABAD: Special Assistant to Prime Minister on Pakistan China Economic Affairs, Khalid Mansoor, said on Tuesday that Islamabad had made a request to the Chinese side for removing stumbling blocks in the way of completion of approximately $12 billion projects under CPEC. He said that Pakistan would be willing to get a mix of Chinese and US dollar loans from Beijing to execute the projects under the CPEC.

"We have sought Chinese support for six energy and one infrastructure project – the Mainline (ML-1) scheme of the Pakistan Railways. The cost of the energy projects is $5 billion and the minimum estimated value of the ML-1 scheme is $6.8 billion,” the SAPM on Pak-China Economic Affairs, Khalid Mansoor, said while talking to a select group of reporters on Tuesday.

He said that he had written two letters to the vice chairman of National Development and Reforms Commission (NDRC) of China, urging him to remove barriers in completion of these projects.

Pakistan, he said, was waiting for a term sheet from China for finalization of loan agreement, adding that Pakistan would demonstrate flexibility on the interest rates, foreign currency and tenor of the loan amounts. Pakistan had earlier requested to get loan at 1pc in US currency but now we are willing to secure the loan at an interest rate of around 2pc in an equal mix of Chinese and the US currency, he added.

The government had approved the 1,700-kilometre ML-I project at $6.8 billion, which Mansoor said was at the lower side. Pakistan has offered the Chinese to arrange all-Chinese competitive bidding for the ML-I project and if the bids are higher than $6.8 billion, the government stands ready to revise the PC-I of the ML-1 project. He said that the military has offered to provide complete security to the project.

“We are trying to save the Gwadar power plant, Karo power plant, Kohala power plant from the adverse impacts of delay in power purchase payments to Chinese sponsors,” said Mansoor. “They (Chinese) are seeking sureties that these new power plants are also not stuck up in the circular debt,” he added.

Mansoor said the government was actively working to pay outstanding dues of Rs250 billion to Chinese companies on account of power purchase payments that are stuck up in the form of circular debt. The government has been paying KIBOR plus 2pc to the sponsors of Chinese power plants on the amount that has been delayed beyond a period. The good thing is that Chinese have not yet invoked the guarantees, which show that they are still willing to work in Pakistan.Expensive electricity is better than no electricity was the slogan at that time and the country was sustaining losses equal to 2.25pc of the GDP, said the PM’s aide.

The Chinese initially laughed at Pakistan’s plan to end loadshedding through Gaddani power park and setting up coal-fired power plants. China then gave an alternate strategy and one by one dropped the Gaddani power park and two Punjab-based coal-fired power plants i.e. Rahim Yar Khan power plant and Muzaffargarh power plant.

Irrespective of what people say about infrastructure, the lives of people have become comfortable due to the mass transport projects, said Mansoor. The CPEC is a quid pro quo. Pakistan went to China to seek help to remove road and infrastructure bottlenecks and in return China asked for road access to connect its western part with the Gwadar Port, said Mansoor. Some $53 billion investment had been envisaged under the CPEC and Pakistan has fairly dealt with the phase-I of the CPEC, said the PM’s aide.

So far, new electricity generation capacity equal to 5,300 MW has been added and 880-kilometre-long transmission line has been laid down. About 3,500 MW capacity power projects were still under implementation. Another 4,144 MW capacity projects were at the planning stage, he added. It is Pakistan’s chance to industrialize and the key is the development of Special Economic Zones under the CPEC, he added. Under the CPEC, nine Special Economic Zones (SEZs) and a Free Zone at Gwadar have been planned and four SEZs and Gwadar Free Zone are being developed on priority, he added. Some Chinese investors have shown their interest to come into proposed SEZs in Pakistan, he said and added that now the focus would be shifted to IT, agriculture and industrial cooperation.

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