Hyde
SENIOR MODERATOR
- Joined
- Oct 20, 2008
- Messages
- 20,543
- Reaction score
- 20
- Country
- Location
No actually I don't know why our journalists don't understand basic issue and keep reiterating to the same arguments.Not only it is going to haunt but the dip also tells that almost all the projects in CPEC are loans. Someone from parlimentary committe on CPEC was telling that 2 Billion USD is FDI, rest is loan.
The infrastructure projects worth 11 billion dollars are loan. They will be owned by Pakistan and being developed by FWO alongside Chinese assistance. They will have to be paid back in due course of time. Some of the infrastructure projects are also funded by ADB and takes the loan figure beyond 11 billion usd
The energy projects are neither FDI nor loan. They are more like project financing that Chinese will own for number of years. In most cases 30 years and then transfer to the Government of Pakistan. Its a pure business that they might generate electricity for say 5-6 cents per unit and selling for around 8 cents per unit to nepra. That is more expensive than projects initiated in India but far cheaper than projects in Pakistan where we also used to generate electricity for 24 cents per unit.
Some of these projects also have high rate of return and hydropower projects would generate electricity for like 2-3 cents per unit and also selling to nepra for 8 cents. Its a win win situation for both Pakistan and China as Chinese will make huge profit whilst Pakistan will get electricity for acceptable tarrif. The availability of water in hydropower projects is added bonus etc.
I think one key reason the government of Pakistan is more committed is that they are hoping Chinese will be utilising the route and whatever money generated from transit route will be helpful in paying off the cost of the projects under construction so we will be in much better position to pay back the chinese when the time comes... but there are if's n but's in it for sure.