• Saturday, February 29, 2020

China reveals its cards for investing $20 billion in Pakistan

Discussion in 'Pakistan Economy' started by Roybot, Jan 20, 2014.

  1. Roybot

    Roybot BANNED

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    China reveals its cards for investing $20 billion in Pakistan

    Hand over all projects without any bidding, asks Beijing; Islamabad ready, changes in laws being considered

    ISLAMABAD: China is demanding that all mega power projects, including the Bhasha Dam, Gaddani and Lakhra coal plants, the Tarbela Extension project and many transmission lines, be handed over to China without any international bidding process, and Beijing will directly invest $22 billion in Pakistan.

    The Nawaz Sharif government is eager to accept this huge Chinese offe, and a loophole in the PPRA rules is being used to hand over all these mega projects to China.

    “Beijing will extend the preferential and medium term soft loans of $22 billion to Pakistan against the guarantees of the government of Pakistan”, a senior official who was part of the recent meeting of the Pak-China Joint Working Group (JWG) held on January 7-8 in Beijing told The News.


    “We have carved out a plan to capitalise on the opportunity that Beijing has extended to Pakistan. Under the plan, Chinese companies will be offered the coal and hydropower and huge transmission line projects under a direct contracting regime which is not against the PPRA rules,” the official said.

    The Ministry of Water and Power has already sent a summary to the Law Division for vetting. The vetted summary allowing the mechanism ofadoptingthe direct contracting regime will then be sent to the Ministry of Finance for a final nod. In case of no objection, the projects will be given to the Chinese companies.

    The Chinese companies have, the official said, refused to take part in international competitive bidding (ICB) to get the contracts in Pakistan’s power sector arguing if Pakistan wants funding from Beijing for various projects, then it will also have to hand over the projects.


    Top officials in the power ministry have found a way out of introducing a direct contracting regime, which is permissible in the PPRA rules, to accommodate the desire of Chinese companies.

    In the Joint Working Group meeting held in Beijing an 18-member Pakistan delegation took part. The meeting was co-chaired by Wu Xinxiong, of the Energy Administration (NEA) of China and Khawaja Muhammad Asif, Federal Minister for Water and Power.

    Beijing offered the huge credit line based on insurance to promote and sustain the development of Chinese energy projects in Pakistan.

    During the recent visit to China, the Three Gorges Corporation extended an offer for 100 percent funding for Pakistan’s most strategic project, the Diamer-Bhasha Dam, worth $11.8 billion that will have a capacity to store 8 million acre feet of water and generate 4,500 MW of electricity. The Chinese company said it will provide the whole funding but the project should be handed over to it without holding any International Competitive Bidding (ICB).

    The said company showed its willingness to immediately release $5 billion to Pakistan for the Diamer-Bhasha Dam so that it could start constructing the dam.China has also offered to install the coal power project of 660 MW in Gaddani and 2x600 MW coal based projects in Thar and 2x600 MW coal based project in Lakhra.

    Pakistan needs almost $16 billion investment to develop the Power Park of 600 MW in Gaddani with jetting and a transmission line. China has also offered to provide $4 billion for evacuation of 6,600 MW through the transmission line, but it demanded the handing over of the project of transmission lines.


    China also offered $700 million for the Tarbela extension V project which if completed will provide 1,400 MW electricity at cheaper rates. The Tarbela Extension IV project of 1,400 MW is already under way and will be completed by 2017.

    China reveals its cards for investing $20 billion in Pakistan - thenews.com.pk


     
  2. AUz

    AUz ELITE MEMBER

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    I don't know whether it is a positive news or a negative one o_O lol..

    Are Chinese investing $22 billion in Pakistan OR they are talking about 'preferential and easy loans'? Confusing...

    I wonder how much $22 billion is?

    Saudis alone are investing $385 billion in their transportation, education, housing sectors...and it is a country of 35 million... :lol:
     
  3. Jade

    Jade SENIOR MEMBER

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    In short run good. As precious foreign reserves would be infused into Pakistani economy giving Pakistani government the reprieve from distress.

    In long run bad. As with out the bidding process, Pakistan is going to loose billion of dollars in income as it is selling its assets for cheap.
     
  4. Fracker

    Fracker SENIOR MEMBER

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    kind of strange, is it Chinese officials don't trust Pakistani Government/Beroucrates (because of Corruption), or they want to take control on Pakistan Energy Requirements? btw Chinese does this to all projects been build in Pakistan, be it highways, infrastructure, or anything else & after finishing the project they always handover back to Pakistani Officials, that's why we never seen "Dollar Numbers" from China's Help & less corruption in those projects & all project get deliver on time, since no Government Slow machinery been used. What ever is the reason, Pakistani Government should get clarification on it before handing over the projects.......

    All projects are in progress, nothing on the ground to be sold, but just Plans
     
  5. Hamartia Antidote

    Hamartia Antidote ELITE MEMBER

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    I wonder how much of that infrastructure is actually going to be built by Pakistani's.
     
  6. khanboy007

    khanboy007 FULL MEMBER

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    This is some serious business we are getting into.....

    I would recommend just glancing through the BASICS, like an overview of how things would be done, perhaps it would give a clear image :) , rest everything would indeed be fine :)

    either way :pakistan: :china: :tup:
     
  7. Barakah

    Barakah FULL MEMBER

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    Not happy about this at all but what can u do when ur countries reserves are only 3 billion....
     
  8. Jade

    Jade SENIOR MEMBER

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    There is no rocket science here. With out bidding Chinese will be getting the assets for dead cheap, and at the same time will escape scrutiny of its investments.

    There is no delay in such projects because your government doesn't interfere or monitors lest it anger China thus putting future investments from China in jeopardy.
     
  9. AUz

    AUz ELITE MEMBER

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    [quote="Jade, post: 5160867, member: 24814"

    In long run bad. As with out the bidding process, Pakistan is going to loose billion of dollars in income as it is selling its assets for cheap.[/quote]

    What assets Pakistan will be selling? o_O
     
  10. Skull and Bones

    Skull and Bones ELITE MEMBER

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    Congratulations, Pakistan should grab the offer.
     
  11. Horus

    Horus ADMINISTRATOR

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    Since there is no forthcoming capital to be invested, this offer is very fair, given the circumstances.

    We ought to have a work share agreement with the Chinese in this regard.

    Once these mega projects are finished, our energy crisis will end.

    If we add the SinoPak transit and these projects, China investment in Pakistan will be around 40 Billion dollars, which will ignite economic growth in a big way.
     
  12. madooxno9

    madooxno9 BANNED

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    If hope China will not bring it's own labour force !!!
     
  13. Jade

    Jade SENIOR MEMBER

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    What assets Pakistan will be selling? o_O[/quote]

    Assets have value because they generate money, hence any stakeholder that gets money from those assets owns a part of that assets.
     
  14. Roybot

    Roybot BANNED

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    I don't think Pakistan has much to lose here. These are just power projects. Worst case scenario, the contracts will go to Chinese companies instead of domestic companies, which mind you is not a bad thing . Chinese civil construction companies today are as good as any other in the world, if not better. They have the expertise, they have the experience, they have the man power, something which majority of the Pakistani companies lack or are not big enough to deliver the project on time.

    Win win for both countries I reckon. Besides this is how Line of Credit works anyways, I lend you money on one condition that you use that money buy my product and services.
     
  15. 45'22'

    45'22' SENIOR MEMBER

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    its a bad deal from pakistan's perspective
    but a very gud deal from china's perspective

    china is asking for big power projects without any bidding.......they must have done their mathematics