China rules out halting of funds for CPEC

ISLAMABAD: China has ruled out any possibility of abandoning funding for any of the projects related to China-Pakistan Economic Corridor (CPEC) confirming that all long and short-term projects would continue within a stipulated timeframe.

The CPEC is intended to rapidly modernise Pakistan’s infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects, and special economic zones.

Rubbishing reports on Thursday that Beijing had halted payments on any of the CPEC projects in the country, Foreign Office (FO) Spokesman Dr Muhammad Faisal, during a weekly briefing, said that there was no news from Beijing that the Chinese government was halting funding for any of the projects. He added that the execution of payments takes place in a specific manner.

The FO’s denial comes days after Minister for Planning and Development Ahsan Iqbal had said that China had halted, for the time being, the release of funds for three CPEC projects till the revision of its ‘financial mechanism’.

In an exclusive talk with Pakistan Today, a senior Chinese official said that the review has nothing to do with the concerns about political or security environment in Pakistan, and rather it is a routine feature for the overall improvement of the CPEC projects. The official added that during the recently held sitting of Joint Cooperation Committee (JCC), Pakistan and China had mutually agreed to review the funding mechanism for three smaller projects.

“Pakistan and China have mutually agreed to explore ways and means to establish new funding mechanisms for projects to be included in CPEC, while funding for rest of the projects already falling under the CPEC remains unchanged,” the official said. He added that the review projects included 210-km Dera Ismail Khan-Zhob artery, 110-km Khuzdar-Basima road and expansion of 136-km Raikot-Thakot Karakorum Highway (KKH).

“The new mechanism being worked on is a more professional arrangement, so there is nothing to fear about it. If anything, it will decrease rather than increase the interest rate,” the official said.

“Review of ongoing projects is a normal and routine feature under the CPEC. Pakistan and China keep studying the progress of CPEC projects and adjustments are made accordingly to improve effective implementation of the projects.”

The source said that till date, China had invested $18.7 billion in various CPEC projects which fall under early harvest stage. Further elaborating, the official said that the Chinese government offers concessional loans to companies involved with the CPEC.

“These loans fall into three categories. Loans offered to Pakistan government carry one to two per cent interest rate. Most of these loans are mostly for projects in the infrastructure sector,” he said and added that China also offers non-reimbursable assistance to some CPEC projects which are not a burden on Pakistani nationals.

“For power generation projects which use the commercial loan, there is less than five per cent interest. On the contrary, some international banks offer such loans on very high-interest rate,” the official concluded.