Ahsan confirms reports of de-funding of three infrastructure projects of CPEC

[Clutch]

Work on three CPEC projects halted till China’s approval, says planning minister


Syed Irfan RazaUpdated December 12, 2017
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ISLAMABAD: China has halted the release of funds for three projects under the China-Pakistan Economic Corridor (CPEC) till the revision of its ‘financial mechanism’ by Beijing, Minister for Planning and Development Ahsan Iqbal confirmed on Monday.

According to an official press release issued by National Assembly Secretariat, the minister informed the 25th parliamentary committee meeting on CPEC that the Chinese side was reviewing the financial mechanism of these projects and work on them would restart after receiving approval from Beijing.

Mr Iqbal could not convince the committee members as to why the Chinese government had opted for a new financial mechanism and scrapped the previous one which was agreed upon by both countries.

Also read: CPEC delay a setback or ‘operational hiccup’?

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It was reported that China had temporarily stopped funding some projects, particularly those related to the road network under CPEC, till a further decision on ‘new guidelines’ by Beijing.

When contacted, Pakistan Tehreek-i-Insaf (PTI) leader Asad Umar, who is also a member of the parliamentary committee, said he had raised the issue of suspension of Chinese funds at the meeting, which was chaired by Senator Mushahid Hussain Syed.

The members, he said, were informed that China was revising the infrastructure projects under its “financial review”.

Another member of the committee, Al-Haj Gul Khan Afridi, said they were told that China had not stopped financing the CPEC projects but raised some ‘technical objections’ to three NHA road projects. A team of Chinese experts would arrive in the country soon to inspect the three NHA projects, he added.

However, a senior NHA official rejected the government claim that work on the three road projects of the authority had been halted on technical grounds. “It is not true that China raised objections to the projects because these had already been approved at the 6th Joint Cooperation Committee (JCC) meeting held last year,” he said.

Ahsan Iqbal informed the committee that the Karachi Circular Railway project had been approved for CPEC, while similar projects for Quetta and Peshawar would be reviewed in accordance with the technical feasibility reports.

Published in Dawn, December 12th, 2017

 

[Clutch]

CPEC delay a setback or ‘operational hiccup’?
Nasir JamalUpdated December 11, 2017
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The lack of adequate information on the outcome of the crucial 7th Joint Cooperation Committee (JCC) on China Pakistan Economic Corridor (CPEC) held in Islamabad last month has triggered speculations about the future of a number of proposed large transport and infrastructure projects.

The way details of the negotiations between the two countries on the future shape of bilateral cooperation around the Corridor initiative has trickled out has led many to conclude that China is probably backing out of its earlier commitments to finance and implement schemes direly needed by Pakistan.

The delays, for example, in the finalisation of the plan to upgrade Peshawar-Karachi railway line (ML1 or Main Line 1) and (Chinese) financing for three road development projects have widely been construed as ‘major setbacks’ for bilateral economic and financial collaboration around the trade route that will connect Western China with the Middle East, Africa and Europe via Gwadar port.

Pakistan’s rejection of the Chinese conditions for constructing the Diamer-Bhasha hydropower project and Beijing’s request to use yuan as ‘official currency’ in Gwadar further ‘strengthened’ this perception.

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But does the ‘development’ on these projects — or lack of it — signify a setback for the future of economic cooperation between Beijing and Islamabad? Or does it merely represent operational hiccups as the Corridor project moves into a new phase?

With little information flowing out of the JCC meeting, according to Hasaan Khawar, a researcher who has done extensive work on the Corridor initiative, the interpretation of its ‘outcomes revealed so far’ can be very subjective in nature.

He is of the view that the agreement on framework for future bilateral cooperation under the Long Term Plan (2014-2030) in the spheres of industry, agriculture, tourism and finance is a major breakthrough. “Now the cooperation between the two countries is going to move beyond connectivity and energy projects.”

He also does not agree with suggestions that the delays in road development and railway line up-gradation projects meant a reduction in China’s interests in them. “I don’t think that China is backing out (as some commentators have since suggested).”

Beijing is just trying to be a little cautious because of (volatile) political conditions here, pausing for a moment as CPEC enters its next phase. Moreover, it does not have unlimited funds and would want to invest in projects and places where it can get better results.

China is probably focusing on implementation of the projects that are already in the pipeline rather than adding more to the wish list.

The total size of CPEC-related investments is said to have crossed $30bn with the overall commitments exceeding $60bn. Apart from some road projects, all other projects are being financed by commercial and concessional Chinese loans. But the government is yet to come clean on the break-up of the Chinese investment pledges in terms of financial arrangements — debt, investment, grants, etc.

Last week the IMF was reported to have conveyed to Islamabad that repayments on account of CPEC-related investments will peak after seven years and reach $3.5bn to $4.5bn a year. The IMF estimates the CPEC-related outflow’s impact on Pakistan to grow from 0.1pc in 2019 to 1.6pc of GDP (gross domestic product) a year by 2024.

Background telephonic interviews with two senior officials at the Planning Commission of Pakistan show that the government is not worried about the delays in the rail and road projects.

Does the ‘development’ on these projects — or lack of it — signify a setback for the future of economic cooperation between Beijing and Islamabad?

“Let me clarify one thing. It wasn’t China that backed out of $14bn Diamer-Bhasha hydropower project. Islamabad pulled out of the deal because of the conditions involved. That is not a setback at all. We are still negotiating the dam outside CPEC but personally I don’t think any Chinese firm will take it unless we agree to their conditions,” one of the two officials explains.

“As far as railway projects are concerned we need to work more on their feasibility. It is incorrect to assume that China has lost its interest in those projects. We just need to work more on different technical and financial aspects before we take these up with the Chinese authorities on balanced terms. You must remember that large projects like $8.2bn ML1 take years before these enter the execution stage.”

The other official argues that the ‘setbacks’ to CPEC as referred by some commentators are no more than operational hiccups and manifestation of an “evolving relationship between the two countries around the Corridor project”.

“Instead of letting early harvest projects set a time benchmark for future investments, we should now focus on commercial sustainability of the projects in the pipeline. We don’t want to go for a commercially unviable project only because it looks good.”

In his opinion, it is time for both the countries to “get out of the project mode and implement the long-term plan to deepen economic partnership. If Pakistan wants to benefit from this new trade route, we should use this connectivity for enhanced bilateral cooperation in industrial and agriculture sectors for transfer of technology and knowledge.”

Published in Dawn, The Business and Finance Weekly, December 11th, 2017

 

[TheBlackCoat]

Funding is not halted. There is a pause as new rules are being implemented.

 

[BHarwana]

Funding is not halted. There is a pause as new rules are being implemented.

There is no pause there some one China wants to get involved in and that party is getting involved. cannot tell any thing more.

 

[TheBlackCoat]

There is no pause there some one China wants to get involved in and that party is getting involved. cannot tell any thing more.

I know that Pakistan military is taking full control of CPEC now, out of the reach of the corrupt politicians of the country.

 

[BHarwana]

I know that Pakistan military is taking full control of CPEC now, out of the reach of the corrupt politicians of the country.

How can politicians effect CPEC the funding is not in hands of politicians.