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Pakistan seeks financing for CPEC’s western route


Aug 22, 2018
United States

Pakistan has once again sought Chinese financing for the western route of the China-Pakistan Economic Corridor (CPEC), requesting Beijing to sign a bilateral framework agreement for implementing the scheme that largely remains on papers due to funding constraints.

The request was made during a meeting of the CPEC Joint Working Group on Transport Infrastructure last week, according to minutes of the meeting. The Chinese delegation was led by Wang Zhiqing, Chief Planner of the Ministry of Transport.

The request to sign the framework agreement for the upgrade of the Dera Ismail Khan-Zhob section of N-50 was made under an agreed policy of undertaking a new mega road project after completion of an ongoing one.

Space has been created due to the completion of Rs298-billion Multan-Sukkur motorway of CPEC. However, despite its completion, the Pakistan Tehreek-e-Insaf (PTI) government has not been able to make the road operational. The delay was also discussed in the JWG meeting.

Meetings of joint working groups of various sectors are taking place ahead of the Joint Cooperation Committee (JCC) meeting of CPEC, which will begin in Islamabad on November 6. A report of the JWG on transport will be presented to the JCC for decision.

The N-50 highway has two road components. The Dera Ismail Khan-Zhob project will cost Rs76.8 billion and the Kuchlak-Zhob section will cost Rs63 billion. These are known as hinterland areas due to backwardness, under-development, and extreme poverty.

Pakistan briefed the Chinese delegation about the status of three short-term projects, which included the upgrade of the Dera Ismail Khan-Zhob section, N-50 phase-I project having a length of 210 km.

The government apprised Chinese authorities that the N-50 project was a top priority as it was the first big project on the western corridor and would also connect backward areas of Khyber-Pakhtunkhwa and Balochistan.

According to the policy of “mature one, advance one”, the N-50 project is in a position to be taken up after the completion of Sukkur-Multan motorway, according to minutes of the JWG meeting. The Pakistani side requested the Chinese side to consider signing a framework agreement for the project and the Chinese side stressed the need for having internal consultation and expressed its willingness to keep in touch with the Pakistani side.

The PTI government had certain reservations about the model of framework agreements that the previous Pakistan Muslim League-Nawaz (PML-N) government signed for the construction of Multan-Sukkur road and Thakot-Havelian project of CPEC. It was not clear whether these reservations had been addressed before the government made a formal request for signing the framework agreement.

Federal Minister for Planning and Development Makhdoom Khusro Bakhtiar was not available for comment.

The framework agreement provides the legal base for completion of a project under the engineering, procurement, and construction (EPC) model and ensures tax exemption for the contractors. The PTI government has referred the Multan-Sukkur and Thakot-Havelian projects to the National Accountability Bureau (NAB) for investigation on suspicion of corruption.

The money allocated in the development budget for the completion of the Dera Ismail Khan-Zhob scheme does not reflect that the N-50’s project is the priority of the government.

Against the cost of Rs76.8 billion, the government has allocated only Rs1 billion this year, according to the Ministry of Planning.

The Dera Ismail Khan-Yarik-Zhob section of N-50 was approved by the Executive Committee of the National Economic Council two and a half years ago. Despite a significant delay, major work on the project could not be started due to the unavailability of funds from both the Chinese and Pakistani sides.

China State Construction Engineering Corporation (CSCEC) briefed the meeting about the progress on the Multan-Sukkur motorway project and asked the National Highway Authority to take over the project, according to minutes of the meeting. The Chinese also urged Pakistani authorities to hold the inauguration ceremony of the Multan-Sukkur motorway at the earliest.

The total cost of the project was Rs298 billion and as of June, this year Rs264 billion had been spent. For this fiscal year, the government has allocated Rs19 billion and so far only Rs400 million has been released, according to the Ministry of Planning.

In March this year, the government also approved the doubling of the track on the Kuchlak-Zhob section of N-50 highway. The Kuchlak-Zhob section had been cleared amid uncertainty over the fate of the Dera Ismail Khan-Zhob section due to lack of funding.

For the Kuchlak-Zhob section, the government has allocated Rs6 billion in the development budget against the total cost of Rs63 billion. Of this, Rs2.4 billion has already been sanctioned for release, according to the planning ministry. For land acquisition for the Kuchlak-Zhob project, Rs3.2 billion worth of project was included in the PSDP and Rs3 billion has already been authorised for release to the executing agencies, according to the planning ministry.

An internal document of the planning ministry showed that the transport section of the ministry was of the view that without dualisation of the Dera Ismail Khan-Zhob section first, there was no rationale for the dualisation of Kuchlak-Zhob section.

The previous PML-N government had preferred the eastern route of CPEC over the western alignment.

Industrial Cooperation JWG

A meeting of the Joint Working Group on Industrial Cooperation was also held on Tuesday via video conference. Both sides agreed to jointly accelerate efforts to enhance industrial cooperation by ensuring concentrated efforts with the early provision of utilities and allocation of land, according to a statement issued by the Board of Investment.

Published in The Express Tribune, October 23rd, 2019.

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