Chinese project financing will dip to $906m in FY2018-19

ISLAMABAD: Project financing from China is expected to dip by more than half to only $906 million during the next fiscal year due to completion of work on some major China-Pakistan Economic Corridor projects and a snail’s pace progress on other schemes.

“As against revised estimates of slightly over $2 billion Chinese project loans for CPEC and non-CPEC projects in the outgoing fiscal year, the government has estimated receiving only $906 million in the next fiscal year,” said sources in the finance ministry.

The estimates for FY2018-19 are $1.12 billion or 55.4% less than the receipts in the outgoing fiscal year.



Some major projects of CPEC are almost near completion while there are problems in other schemes, said the sources in the Finance Ministry.

One of the main projects that is at the verge of collapse is up-gradation of Pakistan Railway's Existing Mainline-1 (ML-I) project, the sources said.

The mainline project’s initial cost of $8.2 billion was part of $60 billion total CPEC investment and loans.

For the next fiscal year, the government has expected receiving only $34 million for the mainline project, suggesting that the project is unlikely to kick-start next year as well.

Pakistan and China have not yet been able to resolve the dispute over the exact cost of the scheme and financing modalities. China’s cost estimates are far higher than the ones worked out by Pakistani authorities.

Similarly, the Basima-Khuzdar (106km) CPEC project is also facing axe.

“Against $11.3 million Chinese loans estimates in the outgoing fiscal year, no foreign loan is budgeted for the next fiscal year,” said the sources.

The Basima-Khuzdar project was part of the western route.

For Zhob to Kuchlak Road of the western route of CPEC no money was received this fiscal year and for the next fiscal year only $3 million are anticipated.

“For the Multan-Sukkur section of 387km, which is part of the eastern route, the $331 million had been estimated for the outgoing fiscal year but the actual receipts are expected to be around $733 million,” said the sources.

For the next fiscal year about $255 million are expected to be received from China, which is about 28.2% of the anticipated Chinese financial assistance for projects.

For phase-I of the Thakot to Havelian 118km section of the eastern route, no money is expected in the next fiscal year.

But for Havelian-Thakot Karakoram Highway phase-II, against $196.7 million about $283 million are expected this fiscal year. For the next fiscal year 2018-19, Pakistan expects $152 million Chinese loan for this project, which is about 16.7% of the estimated Chinese project financing.

For the rehabilitation of KKH between Thakot-Raikot Section 350-CPEC, only $8 million are estimated for the next fiscal year against no releases for this fiscal.

For the troubled CPEC project, Construction of Expressway on Eastbay of Gwadar Port, $49.8 million are estimated for next fiscal year. The project is expected to receive $42 million this year.

For Pak-China Technical & Vocational Institute at Gwadar only $4.2 million are projected to be budgeted for next fiscal year. This year the project did not receive any funds.



For dualisation of Yarik-Mughalkot-Zhob section of N-50 (210km) CPEC western alignment, $37.9 million had been kept in the original budget estimates. But no money was received. For the next fiscal year, an amount of $48 million is expected to be received from China.

For the construction of Cross-Border Optical Fiber Cable System, $3.7 million are expected in the next fiscal year against outgoing year’s $20 million receipts. This project is near completion.

The Chashma Nuclear Power Plants III and IV that have been completed this year would not receive funds in next fiscal year.

The Orange Line Metro Project was expected to receive over $200 million this year but did not receive any fund from China. For the next fiscal year, $190 million are now expected, which are 21% of the estimated Chinese assistance.

For Pakistan Remote Sensing Satellite project $9.5 million are budgeted, which is almost at outgoing year’s level. For Pakistan Multi Mission Satelite $7.2 million are expected to be budgeted. Both projects are not part of the CPEC.

For providing necessary facilities of Fresh Water Supply and Distribution Gwadar, only $1.8 million could be received in the next fiscal year, which is almost at outgoing year’s level.