Islamabad:
Pakistan announced on Friday that China will provide 85% funding for the realignment of the Karakoram motorway and also supported Islamabad’s plan to request funding from multilateral lenders for a strategically important rail link after Beijing refused to extend concessional loans.
Beijing for a long time recommends in Pakistan to consider the regulation of existing debt and to find ways to finance new projects without accumulation of more public debts.
But despite its concerns concerning the situation of Pakistan debt, China agreed to finance 85% of the Karakoram road project as a special case to maintain the road link between China and Pakistan open in extreme weather conditions.
The two parties also agreed that about $ 7 billion, the main line I of the Chinese-Pakistani economic corridor should now be funded by multilateral banks after Beijing has not extended a concessional loan of $ 6 billion.
The discussions on the past and the future of the CPEC took place during the 14th meeting of the joint committee (JCC) which was held in Beijing. Zhou Haibing, vice-president of the National Development and Reform Commission (NDRC) and Ahsan Iqbal, Minister of Planning, co-chaired the meeting.
We have agreed to start teaching on the Karakoram highway in phases and the Chinese party confirmed 85% funding for the project, Iqbal said after the meeting while speaking to L’Express PK Press Club.
The highway needs to realign after parts of them overwhelmed in the water due to the construction of major dams. The government approved the section of 241 kilometers long Thakot-raikot of the project at a cost of 576 billion rupees or $ 2 billion.
The sources indicated that in the first phase, the implementation of the 82-kilometer realignment project from the submerged section due to the Diamer-Basha dam will be taken care of and will work on the formulation of an innovative financing plan.
The two parties did not finalize the report of the JCC meeting, which remains open to discussions.
According to the proposed minutes which have not yet been examined by Pakistan, the Chinese authorities have suggested that Pakistan should consider in depth the elimination of existing debts. He also recommended that the loan requirements for new projects can also be revised and that the government finds financing roads which do not add more public debt.
Iqbal said the Pakistani debt issue was not discussed on Friday at the JCC meeting.
Public debt has increased both in absolute and in terms of economy size during the last financial year, located at 80.5 billions of rupees or little more than 70% of GDP.
China is favorable to the formulation of a practical and achievable financing plan without further increasing the sovereign debt of Pakistan, added the sources.
Beijing also hoped that the Pakistani authorities would strengthen communication to coordinate the progress of the N35 realignment and the Diamer-Basha dam. He had suggested that Pakistan should not store water in the dam, until the realignment project is finished and open to traffic to avoid road interruptions.
ML-I
IQBAL said that China and Pakistan have agreed to continue the ML-1 project thanks to multilateral financing by the Asian Development Bank and the Investment Bank in Asian infrastructure. The BAD has already sent its team for surveys on the ground.
Pakistan and China have also agreed to advance the project to upgrade and reconstruction of the main line of Pakistan 1 (ML1) in phases on the premise to ensure safety.
The two parties had discussed the terms of financing of the ML1 project on several occasions, agreed to accelerate research plan for the test section (Karachi – Hyderabad) and subsequent consultations, and initiated the tender and construction process after having concluded an agreement on the financing plan.
“I would like to underline the urgency that we were satisfied with the ML-I project and the realignment, necessary by the main hydroelectric dams, will preserve an uninterrupted connectivity between our nations and the early implementation of the two projects will produce large-scale economic and strategic dividends for the whole region,” said the equivalent in its closure.
Iqbal said it was agreed that China would help Pakistan prepare a resilience and climate preparation plan and that the two countries would coordinate in their efforts to revitalize the port of Gwadar.
The Chinese also agreed to launch a new series of discussions on the revision of the Pakistani free trade agreement in China to provide prices to Pakistani products that meet the Anase countries to allow better market access to promoting Pakistani exports to China, said the Minister of Planning.
Iqbal stressed that exports must serve as the main engine of economic growth in the next phase. Noting that China’s annual imports exceed 2 dollars of dollars, while Pakistan exports to China are only $ 3 billion, they have asked that Pakistani products have the same market as the Anase countries.
He called for the development of two special economic areas (SEZS) from government to government in Karachi and Islamabad as rotating plates oriented towards export, where industrial resettlement from China in textiles, engineering, electronics, pharmaceuticals and electric vehicles could be hierarchical.
The Minister of Planning also proposed the creation of a Pakistani-China industrial relocation fund to deactivate investors and accelerate foreign direct investments.
The Minister continued by saying that in the light of geopolitics and the fight against negative propaganda of the anti-CPEC forces, the minutes of the meeting of the 14th JCC will be contained so that the JCC remains conclusive, decisive and oriented on the results.
LTP
The two parties also discussed the second phase of the CPEC to align the CPEC Five (5CS) Growth, Innovation, Green, Opendss and Wivelihood with Pakistan’s Uraan (5th) framework, including exports, e-pakistanis and innovation, environment and climate change, and actions, and observation.
IQBAL said that to provide a clear strategic orientation, he proposed the publication of a long -term CPEC update in the 45 days, aligning the framework of Pakistan Uraan 5th with the five corridors of President XI of CPEC 2.0.
The two parties agreed to continuously deepen the alignment between the CPEC Five corridors with the Pakistani framework of Uraan based on 5th.
The two parties agreed to maintain jointly the stability of the electricity price policy for energy projects under CPEC, to resolve disputes thanks to a friendly consultation, and none of the parties will seek to change the status quo through unilateral actions.
The Chinese part hoped that the Pakistani team would establish a circular account for the payment of electricity bills as soon as possible in accordance with the agreement on the cooperation of the energy project under the CPEC signed by the governments of two parties in 2014.
Recognizing the particular importance of Gilgit-Baltistan as the CPEC physical gateway, Iqbal proposed a solar project of 300 megawatts to end the daily power outages from 18 to 20 hours of the region and to transform its economy.
He also stressed that the future of the CPEC must move from government cooperation to attack business partnerships at business.
