UK to partner in CPEC, provide $121.6 million grant

Published: September 1, 2015
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PHOTO: AFP

PHOTO: AFP

ISLAMABAD: In a significant development, the United Kingdom has become a partner in China-Pakistan Economic Corridor and agreed to provide $121.6 million in grant to fund construction of Burhan-Havelian Expressway, which falls on the northern route of the corridor.

The Asian Development Bank (ADB) and the Department for International Development (DFID) of the United Kingdom will co-finance the $327 million cost of the 59km-long Hassanabdal-Havelian Expressway (E-35) project, according to a handout issued by the Manila-based lending agency on Tuesday.

UK’s $121.6 million grant will lessen Pakistan’s debt obligations by the same amount. The country had entered into a loan agreement with ADB, which will now be picked up by UK taxpayers to the extent of the grant amount.

Read: India bid to halt Pakistan projects fails

It is for the first time that the UK will fund any infrastructure sector project in Pakistan, as so far its focus remained on social sectors. It is also the first time that the UK is partnering with the Manila-based lending agency in a project located in Pakistan.

“The ADB and DFID are joining hands to promote regional connectivity, economic growth, and stability in Pakistan”, said Sean O’Sullivan, Director General of ADB’s Central and West Asia Department who witnessed the signing of the agreement.

O’Sullivan is visiting Pakistan for the first time. He said the ADB’s partnership with DFID for the E-35 is an important step towards regional connectivity.

Finance Minister Ishaq Dar and Head of DFID Pakistan, Richard Montgomery, were also present on the occasion. The loan agreement was signed by ADB’s Country Director for Pakistan Werner E. Liepach and Secretary Economic Affairs Division Muhammad Saleem Sethi, while the project agreement was signed by Chairman, National Highway Authority Shahid Ashraf Tarar.

Read: Trade corridor: Road projects to change Pakistan’s landscape, says PM

The ADB had earlier approved $327 million for the project in two tranches of $200 million and $127 million respectively under the multi tranche facility (MFF) for National Trade Corridor Highway Investment Program (NTCHIP).

The original investment was for the E35 expressway connecting the existing M1 at Hassanabdal (Burhan) to Havelian. DFID’s grant contribution of $121.6 million will allow ADB to fund the extension of the expressway to Abottabad and Mansehra to the north.

The DFID will provide the grant in two tranches. The first tranche will be equal to $82.4 million while the second tranche will amount to $39.2 million.

The 59.1km-long Burhan-Havelian road is an important juncture on northern alignment of the CPEC, which will connect the eastern and western alignments with China’s Kunjarab. The total cost of the project is Rs39.5 billion and till June this year an amount of Rs2.8 billion was spent on ground.

There are two other projects that will link Thakot to Havelian on the northern route. The government is also in process of awarding construction contracts of Thakot-Havelian road to Chinese contractors. However, due to high bidding cost the contract has not been awarded yet.

Read: CPEC to benefit all provinces: PM

The upgrade to the E35 Expressway will allow Pakistan to act as a transit artery for goods moving between Arabian seaports in the south and the People’s Republic of China in the north, said the ADB.

The Expressway will enable safer, faster and more cost effective inter-regional transportation of goods and services spurring economic activity and opportunities for the people in towns and cities-along the route.

Head of Office, DFID Pakistan said that the UK’s collaboration will support Pakistan to improve road safety and to create an environment that will transform roads into economic corridors. This partnership will not only help Pakistan promote and expand trade with regional partners, but also to create more jobs and sustainable livelihoods.”

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Reader Comments (32)

  • Human
    Sep 1, 2015 - 6:04PM

    If America did the same and had invested those “$30 billion” in such projects …we would’ve been one of the most pro American people….but instead they handed over the money to greedy politionsRecommend

  • Pakistani
    Sep 1, 2015 - 6:24PM

    Good going pml-N..At least some1 is doing something other than shouting and dharnas..Recommend

  • Sep 1, 2015 - 6:38PM

    200 Million heads to feed and in need of daily needs is a good market. GDP to Household consumption is just 35% in China, i.e. 65% of GDP depends upon export, to grow it you need more market, so both UK and China are now fighting for their share to feast upon Pak public money, to dump their goods here. Exactly what they did with India, glad we are getting out of it now.Recommend

  • Gau Mutra
    Sep 1, 2015 - 7:25PM

    Great news!!! CPEC is a reality which India cannot digest. Not only China but other countries are now looking to invest in this historical project.

    Modi is the best thing that happened to Pakistan. He successfully changed Indian image in the world, he showed to true face of Indian hypocrisy. The world is learning how India is breeding terrorism in many parts Pakistan. Whether it is terrorism in Balochistan, in Karachi or in Pukhtunkhwa from Afghanistan side, the trust is coming out about Indian involvement. Things in Pakistan are getting ONLY better. Recommend

  • Glowing Pakistan
    Sep 1, 2015 - 7:34PM

    Every country from UK to Russia, Russia to china , China to Belarus to etc etc want to
    participate in cpec because they know future economy belongs to this project.Recommend

  • oats
    Sep 1, 2015 - 7:40PM

    @Pakistani: When all is said and done, Nawaz Sharif and his government are busy rebuilding Pakistan and the world sees the improvement. The British want in on the action ! More improvement has been done in Pakistan these past two years than in the past 20 years. Great work Nawaz and keep the foreign investments coming!Recommend

  • Khk
    Sep 1, 2015 - 8:05PM

    @human
    Very knowledgable indeed; almost all the aid came during dictatorships, be it cento, afghan jihad or war on terrorRecommend

  • Raj - USA
    Sep 1, 2015 - 8:46PM

    @Human:
    The real test here is for China. Will China allow Pakistan to accept UK aid? China wants Pakistan to hand over Gawadar and to make Chinese Naval port there. China will not allow even Pakistan’s army/navy in Gawadar. China also wants Pakistan to award all CPEC contracts to Chinese companies selected by China without any bidding process. If other countries are involved, and contribute to CPEC, China will not have the sole say and CPEC will become a multinational commercial project instead of China’s military project.

    Earlier, USA also offered to Join CPEC. USA’s only condition was that Pakistan awards the CPEC contracts in a transparent manner and on a competitive bidding process. China did not allow Pakistan to do so.

    China will not give out a penny if Gawadar is not handed over to it so that they can construct a naval port there. Also, if there is open bidding, China will back out of CPEC.Recommend

  • z
    Sep 1, 2015 - 8:49PM

    Pakistan Zindabad, PM Paindabad.Recommend

  • fahd
    Sep 1, 2015 - 9:06PM

    Long live the Army cheif
    He is the one who steering Pakistan out of problemsRecommend

  • pakistani
    Sep 1, 2015 - 9:22PM

    Thank you UKRecommend

  • Sam I Am
    Sep 1, 2015 - 9:34PM

    @ Fahd Your hated for NS has blinded you to acknowledge that it is the PM NS that is steering the country out of trouble. He appointed General Shareef, brought in CPEC and numerous other social and infrastructural projects that are improving quality of life in Pakistan.Recommend

  • Malik
    Sep 1, 2015 - 9:39PM

    Thank you NS. You have won my vote from PTI.Recommend

  • Syed
    Sep 1, 2015 - 11:26PM

    This UK aid for a project related to CPEC should be dealth with care. As this is not just a construction project, UK is paying to their men on the project to subotage and spying purpose.
    Why UK is going now to help infrastructure project?
    When they knew that Pakistan is lucarative market for any country to invest in infrastructure projects. For example Lahore-ISL motorway has been allotes to Korea for 20 years, they will collect toll from us for next 20 years

    UK needs boots on the ground to watch and provide information to their agencies Recommend

  • Saleem Baloch
    Sep 2, 2015 - 12:21AM

    What I don’t understand is that why no double carriage ways are being built in Balochistan where Gawadar is located and the motor ways are being built in Sindh, KP and Punjab only. The ruler keeps trumping up that Balochistan is going to be developed and Gawadar would be another Hong Kong but sadly they are spending the money on projects where they can garner votes in the next elections.Recommend

  • usman777
    Sep 2, 2015 - 1:56AM

    RajFromUsa,

    plesae tell us what we should do instead. we will do it.Recommend

  • Aviator
    Sep 2, 2015 - 4:31AM

    Will Pakistani firms and manpower be allowed to bid in cpec projects?Recommend

  • Rollin & Trollin
    Sep 2, 2015 - 6:35AM

    @Syed: Exactly my sentiments. This could well be a new Great Game for the ‘East India Company’. Yet remember that UK was one of the first Western countries to seek membership in that new infrastructure bank established in China: AIIB, much to the chagrin of the US. So this could also jive wiith UK’s plans to have a foot in all major strategic infrastructure projects n the Asian region…Recommend

  • virkaul
    Sep 2, 2015 - 8:14AM

    @usman777:
    You have no choice. Do what China tells you. Allow them 18% rate of return on investment, no bidding process, all Chinese equipment, Chinese construction companies ans skilled and unskilled labour. You only guard this working force against sabotage or shooting. Beggars are not choosers.Recommend

  • SK
    Sep 2, 2015 - 8:29AM

    Seems like approval of CPEC has sent a clear message to world economies… you are with us or against us, i.e., in this historic economic juncture and those who want to keep their share in future economic life cycle are opting to be with usRecommend

  • Raj - USA
    Sep 2, 2015 - 8:31AM

    @usman777:
    Form a company and make the land area and Gawadar as its assets. Raise capital from international markets. Open bids for contracts. China will walk out for sure if it does not get Gawadar and contracts without bidding. But Pakistan will keep Baluchistan to itself. The project will be a lot cheaper also. The main opposition will come from politicians, political parties and may be, even army generals as they will not be able to get the huge kick-backs. Google and watch what Nijam Sethi said in Aapas Ki Baat. Also note that during Zardari’s time Chinese investments were at $36 billion and interest rates or guaranteed minimum return to China was 24% per annum. The same investments has now become $46 billion and guaranteed minimum returns to China dropped ot 18.5%. Investments have been inflated to cover more kick backs, guaranteed minimum returns have been dropped to keep the dollar amount at same level. CPEC can be very successful if it is purely a commercial project. If it becomes China’s military project, Pakistan will lose Baluchistan and other countries will not stop their efforts to separate Baluchistan from Pakistan because there is no other way out for them. It is Pakistan’s land and theoretically, Pakistan can do anything with it. But, if others feel they are threatened, they shall react in their own way. Facilitating China to bring its navy and submarines so close to US fleet in the region is not good. India cannot do much on its own but with US support, anything is possible. China will also not let it go easily. When two elephants fight, it is the grass that get crushed. In all sincerity, it is not at all a good idea for Pakistan to facilitate China in its military ambitions. Recommend

  • Khan
    Sep 2, 2015 - 10:23AM

    Looks like India hasn’t been successful in diplomatically isolating Pakistan – as Modi backers so often like to proclaim. Plus the DFID chairman actually visited Pakistan for the first time, so hey, at least we’re starting to attract these officials back to Pakistan instead of just meeting in Dubai. Recommend

  • Khan
    Sep 2, 2015 - 10:32AM

    @Raj – USA:
    “Earlier, USA also offered to Join CPEC. USA’s only condition was that Pakistan awards the CPEC contracts in a transparent manner and on a competitive bidding process. China did not allow Pakistan to do so.”

    This is complete rubbish. “America” offered to join CPEC and no one in Pakistan ever reported this? Also, why would China stop Pakistan from refusing aid from Britain. Has China ever been successful in stopping Pakistan from receiving aid from China’s real rival, the USA? No. What about the aid we’ve gotten from China’s other enemy, Japan – has China blocked that too? No. China doesn’t really act as the jealous lover like Indians seem to think.

    Regarding Pakistan doing this project alone – please inform us, how would Pakistan pay for this? Because as part of CPEC, China is offering a huge amount of loans at only 2-3% interest rates with long grace periods. World Bank/IMF infrastructure loans are much smaller and have interest rates of 5-8.5%. So Pakistan is actually getting quite a good deal. China’s government is subsidizing these loans, and so because they are concessionary loans, they come with some stipulations. In this case that Chinese and Pakistani companies only be considered for these projects. That’s not a big deal, because in the third world open market, Chinese firms usually offer the lowest bid for infrastructure projects anyway. Without these loans, these infrastructure projects won’t be developed. They’ll just end up like Modi’s Delhi-Mumbai Corridor – lots of hype and very little real funding (BTW, the UAE did not actually promise $75Billion to India, just a promise to set up a company to try to raise $75billion). Recommend

  • Khan
    Sep 2, 2015 - 10:41AM

    @virkaul:
    Tell us where you got this 18% return from? Because the vast majority of CPEC funding is coming in the form of low interest (2-3%) concessionary loans. There is not much true foreign direct investment. So where did this 18% come from again? But honestly it doesn’t even amount to much because $35billion of the total $46billion is actually those low interest rate loans.

    You think China just swindled what has been described by academics around the world as China’s only true friend, Pakistan? Do you Indians really think that China swindled Pakistan just for a few billion dollars, when China has several trillions of dollars in reserve already? It doesnt need a couple billion dollars so badly. Or do you think that China is acting as a medieval loan shark and is enslaving Pakistan with high interest rates? Because both scenarios are easily disproven with even just a minimal amount of research, and so both scenarios would be quite laughable.Recommend

  • Raj - USA
    Sep 2, 2015 - 11:17AM

    Watch this: http://www.dailymotion.com/video/x32qnci
    This answers all your questions. I do not know where you are getting the 2-3% interest rate.Chinese government is lending money to Chinese companies which the Chinese companies will use for CPEC project work. May be Chinese government is charging 2-3% interest rate.

    Read also this:

    http://www.sify.com/news/pakistan-china-economic-corridor-deal-runs-into-rough-weather-news-international-pivjCXdcajebb.html

    Read in this report:
    “Officials in Pakistan have reportedly railed against such interference, but the missive from China appears to be clear – “no Chinese company means no project, and therefore, no money.”

    “With the process halted because of the “Chinese firms only” clause, the other contenders for the proposed economic corridor, including those from the United States, the Gulf and South East Asia, are in commercial limbo not of their making.”

    Read also this:

    http://www.valuewalk.com/2015/06/china-pakistan-cpec-agreement-complicates-geopolitics/

    The main issue is handing over Gawadar port to China. Recommend

  • Bewildered
    Sep 2, 2015 - 12:15PM

    “The main issue is handing over Gawadar port to China.”

    Our port and our right to give it to whom ever we like. If USA and a dozen countries can hand over their ports to Chinese companies, or if India can take over Chahbahar port then why the fuss over Gawadar? In fact it could have been India running Gawadar had it not taken a hostile stance against Pakistaamicably in democratic way.Recommend

  • Amir kahn
    Sep 2, 2015 - 2:38PM

    What?? The PM made a statement a few weeks back that burhan to mansehra was supposed to be a motorway then why expressway !! :(Recommend

  • usman777
    Sep 4, 2015 - 4:32AM

    There is this really nice Indian fellow in Amreeka name @Raj from USA. It is astonishing but he is the most caring Indian, Pakistan can ever know. He has Pakistan’s best interest and heart. He says we should not build CPEC because if we do, India will have no choice but to remove Baluchistan from Pakistan with Amreeka’s help.

    I therefore declare STOP CPEC. Raj says so!

    Who is with me?Recommend

  • Sarfaraz Abbasi
    Sep 5, 2015 - 11:14PM

    @Raj – USA:
    An Indian narrative on this becomes too complex to be taken seriously. Recommend

  • shah
    Sep 16, 2015 - 12:47PM

    @Raj – USA:

    You Are Obviously In Need of An Education Sify Is Just An Indian Media Outlet and It Is Just Baseless and It Is Just An Expression Of Indian Dreams The Conditionality Of Direct Award Of Contracts Was Already Spelt Out Clearly and Categorically In The Various Agreements.So It Is Not As If The Government Was ‘Taken Aback’ By The ‘China Only’ Clause.CPEC Has Not Run Into Rough Weather

    You Can Pretend To Be An Expert Quoting An Indian Media Outlet and A Compromised Journalist Like Najam Sethi.I Can See Through Your Game

    @virkaul:
    I Love How You Indians Are Tossing and Turning Over CPEC. Keep Trolling(Pretending To Be ‘Experts’) We Pakistanis Are Just Lapping Up The Entertainment lolRecommend

  • Afzal
    Sep 16, 2015 - 8:58PM

    @shah:
    Raj from USA does seem convincing, it is a different matter that he may be seeing too much into things and largely on theoretical basis. Could I ask you what you mean by Najam Sethi being a compromised journalist ? Please do answer as I often watch his ‘Apas ki baat’ but do not know much about him.

    Afzal – UK Recommend

  • shah
    Sep 18, 2015 - 12:34PM

    @Afzal:
    He Has Not Given Any Credible References and Sitting Thousands Of Miles Away In USA A Man Who Has Never Seen Pakistan Let Alone Balochistan Is Being An Expert On CPEC and Quoting An Indian Media Outlet Which Is Anything But Reliable or Objective About Pakistan

    It Is A Known Fact That Chinese Offer Financial Assistance On The Condition of Direct Awarding Of Contract Is Their Typical MO in Business.The ‘China Only’ Clause Was Mentioned Clearly in All Of The Agreements Signed During President Xi’s Visit.So To Say That Bureaucrats Are Resisting Is Completely Wrong.Tao Say That All Of A Sudden CPEC Has Run Into Rough Weather Is Laughable

    As Far As Najam Sethi Is Concerned Why Don’t You Come To Pakistan And Ask Anyone About The Kind Of Reputation He HasRecommend

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