PM gives nod to abolish CPEC Authority

China will first be taken into confidence before going ahead with move

ISLAMABAD:

Prime Minister Shehbaz Sharif on Wednesday approved, in principle, to abolish the China-Pakistan Economic Corridor (CPEC) Authority subject to consent by China – a decision that the government says will help fast-track the implementation of the multi-billion-dollar project.

The decision was made on the basis of a summary that the planning and development ministry had moved two months ago to wrap up the body that had remained controversial since its inception.

“This is in the interest of CPEC that the authority should be dissolved to ensure fast implementation of its projects,” Planning and Development Minister Ahsan Iqbal said while confirming the development.

He added that PM Shehbaz had instructed that China should first be taken into confidence before going ahead with the move to ensure that the strategic ally should not be left with the impression that Pakistan was rolling back CPEC.

The minister further said the CPEC Authority Act would be repealed once the Chinese authorities give their consent.

Sources said China did not interfere in Pakistan’s internal decision making about the CPEC implementation mechanism.

They added that its name in the past was misused to neutralise people, who were not in favour of having a military-dominated authority.

The decision to wind up the CPEC Authority is in line with the PML-N’s old policy that was never in favour of establishing a parallel set-up.

Even the PTI government took over two years to set up the authority. However, it largely remained dormant as the last political dispensation too was not in favour of having the authority.

Iqbal said the CPEC Authority had become an obstruction in the fast implementation of the projects because of the breakdown of the decision-making chain.

He said now the planning and development ministry would play a facilitator role. The execution of the CPEC projects would be in the hands of the line ministries, he added.

The minister noted that the government would restore the old institutional arrangement that helped the swift implementation of CPEC projects between 2014 to 2018. He also said the CPEC Secretariat would be revived in the planning and development ministry.

Last month, the government had decided that the CPEC Support Project would be strengthened. The Centre of Excellence for CPEC would be transferred back to the Pakistan Institute of Development Economics (PIDE).

The previous PTI government had reluctantly enacted the CPEC Authority but it never filled the chairman’s post after Lt Gen (retd) Asim Saleem Bajwa’s resignation.

Because of a delay in making the final decision to dissolve the authority, people had started lobbying for the vacant post of the CPEC Authority chairman. Lately, special assistant to the prime minister Zafaruddin Mahmood had been active for the slot.

The Chinese authorities were irritated because of Pakistan’s decision to put CPEC on the backburner during the past four years. They were particularly irked by Islamabad’s failure to honour its contractual obligations under CPEC framework.

The establishment of a revolving account has been pending since the signing of the CPEC Energy Projects Framework Agreement in 2014.

A day before departure to China to seek a major bailout, the then government had announced to open the account but when a summary was presented before the Economic Coordination Committee (ECC) of the Cabinet for approval on April 1, 2022, then finance minister Shaukat Tarin had deferred the final approval.

The CPEC projects were also facing delays because of the change in taxation policies by the last government in violation of commitments given to China.

The PTI government had last year withdrawn the sales tax exemption on imports.

As per the initial CPEC plan, Special Economic Zones (SEZs) were supposed to be ready by 2020 but unfortunately, in the last four years, there has been zero progress on them.

Iqbal on Wednesday also reviewed the progress of CPEC projects and preparation for the next Joint Cooperation Committee (JCC) meeting. Pakistan has been trying to hold the meeting of the JCC -- the strategic decision-making body since May. However, the Chinese authorities were first interested in knowing the incumbent government’s commitment to CPEC.

So far, meetings of seven different Joint Working Groups (JWGs) of CPEC have been held. They include the JWGs on socio-economic development, industrial cooperation, science and technology, transport infrastructure and international cooperation.

The latest meeting on the JWG on information technology was held on July, 28, 2022 in which the two sides agreed on 10 specific areas of cooperation in the sector.

The sector-specific JWGs finalise the agenda for the JCC. Their meetings are critical for holding a successful JCC.

The JWG on agriculture will be held in the third week of September this year for which proposals have been finalised by the national food security and research ministry. The Power Division said the agenda for the JWG on energy had been finalised and the meeting would be held next month.

China has put the issue of the outstanding payments of over Rs260 billion to its independent power producers for its amicable resolution.

The meetings of the JWGs on safety and security and CPEC long-term plans are also expected next month, according to a statement issued by the planning and development ministry.