Islamabad:
Pakistan announced on Friday that China will provide 85% financing to adapt Karakoram Highway and has also supported Islamabad’s plan to seek financing from multilateral lenders to a strategically important railway link after Beijing refused to extend concession loans.
Beijing has long recommended Pakistan to consider the settlement of existing debt and find ways to finance new projects without accumulation of more public debt.
But despite its concerns about Pakistan’s debt situation, China agreed to finance 85% of the Karakoram Highway project as a special case to keep the road connection between China and Pakistan open under extreme weather conditions.
Both sides also agreed that approx. $ 7 billion main line-in-project from China-Pakistan financial corridor now had to be funded by multilateral banks after Beijing did not extend a concessional $ 6 billion loan.
The discussions about the past and the future of CPEC took place during the 14th joint cooperation committee (JCC) meeting held in Beijing. Zhou Haibing, Vice -President of the National Development and Reform Commission (NDRC) and Ahsan Iqbal, Planning Minister, co -chair of the meeting.
We agree to start offering Karakoram Highway in stages, and the Chinese side confirmed 85% financing for the project, Iqbal said after the meeting while talking to Express Pakinomist.
The highway needs adjustment according to parts of it submerged in water due to the construction of larger dams. The government has approved the 241-kilometer Thakot-Raikot part of the project at a price of RS576 billion or $ 2 billion.
The sources said that the implementation of the submerged section in the first phase will implement the immersed section of 82 kilometers due to the Diamer-Basha dam being taken up and working on the formulation of an innovative financing plan would also continue.
Both sides did not end the protocol from the JCC meeting, which still remains open to discussions.
According to the proposed minutes that have not yet been monitored by Pakistan, the Chinese authorities suggested that Pakistan extensive to consider the disposal of existing debt. It also recommended that the loan needs for new projects can also be reviewed, and the government should find opportunities for funding that do not add more public debt.
Iqbal said the question of the Pakistani debt was not discussed Friday at the JCC meeting.
Public debt increased both in the absolute and in terms of the size of the economy in the last financial year, which was on RS80.5 trillion or just over 70% of GDP.
China is in favor of formulating a practical and feasible financing plan without further increasing Pakistan’s sovereign debt, the sources added.
Beijing also hoped that the Pakistani authorities would strengthen communication to coordinate progress with the N35 restructuring and the Diamer-Basha Dam. It had suggested that Pakistan should not store water in the dam until the restructuring project has been completed and opened to traffic to avoid road breaks.
Ml-i
Iqbal said China and Pakistan agreed to continue with the ML-1 project through multilateral funding from the Asian Development Bank and the Asian Infrastructure Investment Bank. ADB has already sent his team to field research.
Pakistan and China also agreed to promote the upgrade and reconstruction project for Pakistan’s main line 1 (ML1) in phases on the premise of ensuring security.
The two sides had discussed the financing conditions in the ML1 project on several occasions, agreed to accelerate research in the financing plan for the test section (Karachi – Hyderabad) and the subsequent consultations and initiated the bid and construction process after reaching an agreement on the financing plan.
“I want to emphasize the urgent speed we have agreed to the ML-in project, and the adaptation necessitated by major hydropower dams will maintain an uninterrupted connection between our nations and the early implementation of both projects will yield far-reaching economic and strategic benefits for the entire region,” Iqbal said in his closing means.
Iqbal said it has been agreed that China would help Pakistan prepare for climate consumption and emergency plan and that both countries would coordinate in their efforts to revive the Gwadar Port.
The Chinese also agreed to launch a new discussion round on the audit of China Pakistan Free Trade Agreement to provide tariffs for Pakistani products on par with ASEAN countries to give better market access to promote Pakistani exports to China, the planning minister said.
Iqbal emphasized that exports should serve as the most important driving force for economic growth in the next phase. By noting that China’s annual import exceeds $ 2 trillion, while Pakistan’s exports to China are only $ 3 billion, he called for Pakistani products to gain the same market access as the ASEAN countries.
He called for the development of two special economic zones (SEZs) in Karachi and Islamabad as model export-oriented nodes, where industrial relocation from China in textiles, technology, electronics, pharmaceutical substances and electric vehicles could be prioritized.
The planning minister also proposed the establishment of an industrial relocation fund in Pakistan-China to reject investors and accelerate foreign direct investments.
The minister continued to say that in the light of Pakinomist-policy and to counteract negative propaganda of anti-CPEC, they forcing the 14. JCC’s minutes of the meeting agreed, so JCC remains crucial, decisive and results-oriented.
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Both sides also discussed the second phase of CPEC to adjust the CPEC Five Corridors (5CS) growth, innovation, green, openness and livelihood with Pakistan’s uraan (5es) framework, comprehensive exports, e-Pakistan & Innovation, Energy & Infrastructure, Environment and Climate Change and Equality and Equality, ethics and Empaction.
Iqbal said that in order to give a clear strategic direction, he suggested the publication of an updated CPEC long-long plan within 45 days, which adjusted Pakistan’s Uraan 5es frame with President XI’s five corridors in CPEC 2.0.
The two sides agreed to continuously elaborate on the adjustment between CPEC -FEM corridors with Uraan Pakistan frame based on 5Es.
The two sides agreed to maintain the stability of the electricity price policy for energy projects under CPEC, solve disputes through friendly consultation, and none of the pages must try to change the status quo through one -sided actions.
The Chinese side hoped that the Pakistani side would establish a circular account for payment of electricity bill as soon as possible in accordance with the energy project cooperation agreement under CPEC signed by governments on two pages in 2014.
Iqbal recognized the particular importance of Gilgit-Baltistan as the physical gateway for CPEC and suggested a 300 megawatt solar project to complete the region’s 18-20 hour daily blackouts and to transform its economy.
He also emphasized that the future of CPEC must turn from government-to-government cooperation to business partnerships.
