In April this year, Pakistan shared a terms sheet for a Chinese loan, asking for an interest rate of 1%.
Islamabad:
Pakistan has decided to seek a loan of USD 2.7 billion from China for the construction of Package I of the Mainline-1 project of the China-Pakistan Economic Corridor (CPEC).
Quoting government officials, The Express Tribune reported that the sixth meeting of the financing committee of the ML-1 project, which includes the dualisation and modernization of the 1,872 km railway line from Peshawar to Karachi, decided that Pakistan would initially ask China to sanction only 2.73 billion USD loan out of the estimated total Chinese financing of about USD 6.1 billion.
This development comes even as the Pakistani economy has been on the verge of bankruptcy for some time and the COVID-19 pandemic has made matters worse.
The Ministry of Economic Affairs has been instructed to officially send the letter of intent to China next week, as Beijing is expected to finalize its funding plans for next year by the end of this month, reported The Express Tribune.
“In April of this year, Pakistan shared a terms sheet for a Chinese loan, asking for an interest rate of 1 percent. But China has yet to officially respond to the request. They said the Informal Chinese authorities had indicated that the interest rate could be higher than that mentioned in the terms sheet, ”the sources told the Pakistani daily.
In May, former Pakistani Ambassador to the United States Husain Haqqani wrote in an article for The Diplomat that Pakistan’s desire to maintain strategic relations with China resulted in the construction of $ 62 billion in CPEC, which includes a set of infrastructure projects, with insufficient transparency.
“China’s continued strategic support, including aid to Pakistan’s nuclear program, is often favorably supported by the Pakistani military establishment, unlike the more conditional Pakistani alliance with the United States. But it now seems that China is not in Pakistan to help its people but rather as a predatory economic actor, ”he said.
The 278-page report of the “Committee for Power Sector Audit, Circular Debt Reservation, and Future RoadMap” identified embezzlement to the tune of 100 billion Pakistani rupees (625 million USD) in the independent power generation sector, of which at at least a third relating to Chinese projects.
According to the commission’s report, “excess installation costs of (Pakistani Rupee) 32.46 billion rupees (approximately 204 million USD) were awarded to [Chinese] plants due to misrepresentation by sponsors regarding [deductions for] “Interest during construction” (IDC) as well as disregarding previous completion of factories. “
The interest deduction was apparently allowed for 48 months while the factories were completed within 27-29 months, qualifying for an excess return on equity (RoE) of $ 27.4 million per year over the life of the project of 30 years in the case. of the Sahiwal plant.
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
