China on Saturday said Pakistan will start repayment of loans from year 2021, and that it has to repay only $6.017 billion concessional as well as interest-free loans and their interest to Beijing under the China-Pakistan Economic Corridor (CPEC) project.
“The Chinese government has provided concessional loans of $5.874 billion for Pakistan government’s major transportation infrastructure projects, with a composite interest rate of around 2% in repayment period of 20-25 years. The Pakistani government has provided sovereign guarantee for the above loans and will start the repayment from 2021,” a statement issued by the Chinese Embassy in Islamabad said.
“The Chinese companies and their partners have invested an amount of $12.8 billion in energy projects in Pakistan. Among those, Chinese companies have provided $3 billion from their own equity. The rest $9.8 billion is raised from commercial banks with interest rate of about 5%. The repayment period is 12-18 years,” the statement said. “All the CPEC energy projects are investment in nature, which is purely an independent venture of these companies who are responsible for their own profits and losses and repayment of loans,” it continued. “Pakistani government does not repay these loans under CPEC. The business cooperation between the two sides is in full compliance with internationally accepted business practice,” it added.
“The Chinese government has provided interest-free loans for Expressway East Bay in Gwadar as well as grant for some livelihood projects,” the statement said. “Pakistan government has provided funding for the feasibility study of ML-1 upgradation,” it said. “Therefore, Pakistan will repay only $6.017 billion and their interests to China. Both countries are discussing how to use Chinese grant to implement new projects such as Gwadar International Airport, Gwadar Vocational Training Center and Friendship Hospital,” the statement said, as it rubbished a recent media report that Pakistan will repay $40 billion debt to China under CPEC.
“CPEC is a major and important economic cooperation project between China and Pakistan. All CPEC projects are based on consensus of the two countries and fully comply with relevant laws and regulations,” the statement said. “Currently, 22 early harvest projects under the CPEC have been completed or are under construction, with a total investment of $18.9 billion. These projects aim at resolving two major bottlenecks hindering economic development of Pakistan: lack of transportation infrastructure and energy shortage,” it elaborated.
During Prime Minister Imran Khan’s visit to China in November 2018, the two sides reaffirmed their commitment to CPEC and agreed to ensure the normal operation of the completed projects and the smooth completion of the ongoing projects. The two sides also agreed to consult with each other on the future path and direction of CPEC, taking consideration of Pakistan’s priority of economic and social development and the demand of Pakistani people.
On December 20, China and Pakistan successfully held the eights JCC meeting of CPEC in Beijing and decided to set up a social economic joint working group under CPEC. The Chinese side agreed to provide more support to the people’s livelihood projects such as education, agriculture, poverty alleviation, healthcare and vocational training. Both sides signed an MoU on industrial cooperation and agreed to jointly promote the construction of special economic zones. The CPEC has entered a new phase of broadening and expansion during the next five years.
“We are willing to join hands with Pakistani friends to nourish CPEC and create a favorable environment for cooperation. We believe that CPEC, as an important project for China-Pakistan all-weather cooperation, will not only help Pakistan to ease energy load shedding, improve infrastructure connectivity, promote economic growth but also benefit the people of Pakistan and make an important contribution to the building of China-Pakistan community of shared future,” the statement concluded.
Published in Daily Times, December 30th 2018.
