Despite the political hurdles, the government has finally been able to formalise the much-delayed cooperation agreements with China worth $45.65bn under the China-Pakistan Economic Corridor Project, with a clear implementation schedule.
The investment-cum-loan package of $45.65bn would be utilised from now to year 2025. This would involve about $34bn in private sector investment by Chinese companies, insurers and banks.
The remaining $11bn will be in the shape of ‘ concessional loans’ and some grants, according to Planning and Development Minister Ahsan Iqbal. The only explanation about the ‘very concessional loans’ extended by the minister was that the mark-up on these credits would be much lower than those on domestic loans.
These would be used mostly for projects that are not attractive enough even for public-private partnership (PPP) mode, like some sections of the Lahore-Karachi Motorway or the highway from Hazara division to up north.
A new project — the $1.6bn Orange Line (mass rail transit project) — was included in the package for Lahore during the recent visit of Prime Minister Nawaz Sharif to Beijing. Already having spacious roads and infrastructure, the historic city would be another step ahead of the country’s other mega cities in terms of modern transport facilities.
Meanwhile, the two countries signed agreements to develop 16,400MW worth of energy projects in two phases. In the first phase, 10,400MW projects, involving an investment of $15.5bn, would be completed by 2017. This will be followed up with $18bn worth of another 6,600MW projects, besides transmission lines, the Gadani power park and a jetty.
A total of 7,560MW worth of projects in the first phase would include coal-based power stations. These, on completion in three years, would help bring down power tariffs as they would be producing energy at about Rs10 per unit, against the expensive Rs20-22 per unit generated from furnace oil.
Mr Iqbal said 1,600MW worth of hydropower projects would further bring down the tariff, but these would take a little while longer to materialise because of the longer gestation period involved in their engineering works.
About $5.9bn worth of road projects would be developed, including 832km of the Karakoram Highway and the Lahore-Karachi Motorway put together. Another Rs3.69bn would be spent on improving the 1,736km rail network, which would increase the speed of travel between the north and the south from 80km per hour to 120km per hour.
Another $700m would be utilised for the improvement of the Gwadar Port, including its airport and road links, and on the cross-border optic fibre cable system. “Converting projects from paper to reality would be the real test. As they say, the taste of pudding is in eating,” said a senior government official.
