China commits $45.6 billion for economic corridor with Pakistan
The Chinese companies will be able to operate the projects as profit-making entities, according to the deal signed by Prime Minister Nawaz Sharif during a visit to China earlier this month.
At the time, officials provided few details of the projects or the financing for the deal, dubbed the China-Pak Economic Corridor (CPEC).
The deal further cements ties between Pakistan and China at a time when Pakistan is nervous about waning US support as troops pull out of Afghanistan. Pakistan and China, both nuclear-armed nations, consider each other close friends.
Their ties are underpinned by common wariness of India and a desire to hedge against US influence in South Asia.
Documents seen by Reuters show that China has promised to invest around $33.8 billion in various energy projects and $11.8 billion in infrastructure projects.
Two members of Pakistan's planning commission, the focal ministry for the CPEC, and a senior official at the ministry of water and power shared the details of the projects.
The deal says the Chinese government and banks, including China Development Bank, and the Industrial and Commercial Bank of China Ltd (ICBC), one of China's 'Big Four' state-owned commercial banks, will loan funds to Chinese companies, who will invest in the projects as commercial ventures.
"Pakistan will not be taking on any more debt through these projects," said Minister for Water and Power Khawaja Asif.
Major Chinese companies investing in Pakistan's energy sector will include China's Three Gorges Corp, which built the world's biggest hydro power scheme, and China Power International Development Ltd.
Sharif signed more than 20 agreements during his trip to China earlier this month, including $622 million for projects related to the deepwater, strategically important Gwadar port, which China is developing.
The port is close to the Strait of Hormuz, a key oil shipping lane. It could open up an energy and trade corridor from the Gulf across Pakistan to western China that could be used by the Chinese Navy - potentially upsetting rival India.
Pakistan sees the latest round of Chinese investments as key to its efforts to solve power shortages that have crippled its economy.
Blackouts lasting more than half a day in some areas have sparked violent protests and undermined an economy already beset by high unemployment, widespread poverty, crime and sectarian and insurgent violence.
Under the CPEC agreement, $15.5 billion worth of coal, wind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid, officials said.
An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.
"In total we will add 16,000 MW of electricity through coal, wind, solar and hydel plants in the next seven years and reduce power shortage by 4,000 to 7,000 megawatts," said Asif.
"This will take care of a growing demand for power by a growing economy."
The CPEC deal also includes $5.9 billion for road projects and $3.7 billion for railway projects, all to be developed by 2017.
A $44 million optical fibre cable between China and Pakistan is due to be built.
COMMENTS (26)
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Ladies & Gentlemen
Lets not be carried away with negative remarks. Let the critics say whatever they want to say to undermine these Projects. All these things happened when NS detonated nuclear Bomb, built Motorway, laid Optic Fiber to ease National telephone Lines Demand
We must support NS or any Govt that will improve Pakistan infrastructure, reduce foreign dependence and accelerate Economic Growth
If country like China can be termed as corrupt or nothing will matrialize attitude then we shall keep sitting on piles of Problems with progressive increase.
The Govt must get all political Parties unanimous support and give these Projects constitutional Protection to ensure that these are completed on target dates
aRazzaq - 25 Nov 2014 - 5:33am
Wake me up when Chinese actually invest a single dollar in Pakistan. It's all US money right now invested.
@Umar Sear: Govt will be buyer of the electricity these plants will be producing. So sovereign gurantees are not really uncalled for. And for your information, what PTI is not telling you is that these sovereign guarantees are being provided since 1990s . Engro under Asad Umar invested ~USD 200m based on one such sovereign gtee. Lenders don't lend if govt does not offer power purchase agreement my friend....
Don't trust Chinese Premier! They cheat US. India is far better than them
@sabi: There is a tendency among Pakistani rulers, not only PMLN but predecessors as well to competitively exaggerate the "number" of MoUs and amount signed during visits. The news only appeared in this media, and several days after the visit, released on a day of a rival political activity. Do newspapers concern a news item only a day old? I am still wondering that place of source is Islamabad, and the source itself is "Reuters", how does it matches. Reference to Dar was not relating to this news but to establish the fact that PMLN govt has misled the nation many times before. From the floor of the house, Dar has given different figures to the nation and the IMF on economic growth etc., and has this practice this many times. My humble submission dont blindly trust what media portrays. There are huge stakes involved. From government perspective, prosperity is flowing across the country (canal of milk and honey). What is on ground, you must be knowing better if you are in Pakistan (and please update us). Below is a piece on the same issue published immediately after the visit. It sheds some light on the topic.
Yeah, this ain't happening. Even if they wanted to they would struggle to spend this much money in Pakistan in this time frame in a productive way.
to all the doubters and haters the source for this news is Reuters.. maybe they have started resorting to lifafa journalism as well "P
@ Grace: There is no doubt that country is looking for development but as educated citizens of Pakistan we are asking for details on the projects. Why do we need coal projects when we can produce electricity from water dams. This electricity will be much cheaper and clean energy. Than why should we go for such projects which will be costlier and will pollute the environment of Pakistan. The list goes on so as Pakistani we all have the right to ask the present government about the vested interest of individuals in the government who are ignoring these facts to gain personal wealth out of these projects.
@Dr Ghulam Ali: It's not Ishaq Dar but Reuter which is giving this news and source is most possibly China government.This amount may sound big for investment starving pakistan but not for rising economic power China which aims to reduce transport charges for its import export items to the tune of tens of billions yearly.
Let the details come through and then see; If it's Chinese banks giving loans to Chinese companies why does there need to be a deal between China and Pakistan? let me tell you ... It's because the Pakistani Government will provide sovereign guarantees for the loans.
So basically if the project(s) fail, the businesses default etc etc guess who foots the bill including interest ? Pakistani people through the Pakistani Government.
So whilst you celebrate they are selling the land under your feet!
@Akon: "Chinese investment in USA is around $14-18 billion." What does that even mean? You do know that China buys hundreds of billions of dollars of US treasury bonds to finance public spending in the US, right? In fact, it's the largest foreign holder of US debt. And US-China trade is astronomically high. Are you talking about direct Chinese owned projects in the US? Those likely won't be too large, but they don't need to be. US doesn't need foreign capital for investment. They have plenty in their own system. Plus, there are all kinds of restrictions on Chinese public entities operating in their market.
@Cynic Waheed: The whole country is looking to development. Why can't we grow up and give credit where it is due? Whether PTI or PMLN or PPP; whoever does good for the country, we should support them and cleary Nawaz Sharif is doing a good job of improving he things that others haven't done. I just hope Imran Khan doesn't try to scare away investment in Pakistan through more dharna business.
The amount is quite skeptical. PMLN is known for fabricating digits. On record, Dar has played with figures relating to economic growth. There is always huge gap between what government narrates and the actual state of affairs in any given area. Government only provides the number of protesters taking place in dharnas with caution, rest of figures are highly exaggerated. Very funny, details came from the “Reuters”, there is no confirmation from China, the main investor of this huge amount. Look at the timing. News was released when PTI was having a successful jalsa in Sindh. It does not need to be a Newton to understand the intentions of repeating a news item of PM visit that took place many days ago. Metro Bus Vision teri azmat ko salaam.
This is what IK is scared of. If Nawaz sharif is able to significantly reduced loadshedding and tackle the gas problem by building the LNG terminal, PMLN will be unbeatable in elections for the next 10 years and there will be no future left for IK's PTI!
Well-done Muhammad Nawaz Sharif. Carry On..
Chinese investment in USA is around $14-18 billion. It sounds fishy if they want to invest double the amount in lawless Pakistan. May be they are trying to tease and appease Pakistan that the investment is more than the committed investment in India which $20 billion. Better to be skeptic until the money starts pouring in.
Lets be hionest, its just an eye wash! seriously stop counting your eggsbefor ethey hatch.
And Allah Ditta bhai, I have been noticing you from a few years.. whatever NS does (or doesn't do), somehow it fans your hatred of IK! And I can see mashallah you are amazingly happy with NS and the lot! I hope to see you supporting Hamza or Maryam in the coming years! Mubarak ho, enjoy them, you deserve them. :)
Regards,
That is a good amount of money. I hope Nawaz Sharif uses it to improve Pakistan's economy. It is time everyone in the region focuses on growth and development. We can settle other issues later.
Chinese are not far behind PML N for corrupt practices. We know that from experience but this suits Nawaz gang.
Weldone PAK GOVT
Great news looking forward to seeing them materialize!
Long Live Pak China Friendship.
Pak China Cooperation will benefit the whole region.
regards,
okay everybody..now start criticizing!!
Also as these project will be nearing completion hundreds of billions of dollars of investment will start coming.I'm afraid we will be facing man power shortage.
Go ahead Nawaz Sharif world trust you and so is the majority of Pakistanis. Build your Roshan Pakistan.inqilabis are defeated.