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ISLAMABAD: As Prime Minister Imran Khan is bracing for a three-day official visit to China during the first week of February 2022, Prime Minister Office, Ministry of Foreign Affairs, Ministry of Planning, Development and Special Initiatives and Board of Investment (BoI) have started interactions with other line ministries to finalize agenda of premier’s meetings with Chinese leadership and private sector companies.

Well informed sources told Business Recorder that in addition to geopolitical and defence cooperation at the highest level, Prime Minister will have high level interactions with the Chinese private sector to attract investment in the second phase of CPEC.

The sources said, Board of Investment has been tasked by the National Security Division (NSD) to collect the data of notable Chinese companies with a definite plan to invest in Pakistan.

According to the BoI, during the expected forthcoming PM visit to China, the top leadership of the shortlisted companies will be meeting to provide assurance of their investment plan in Pakistan that are at an advanced stage.

BoI’s CPEC Section has written letters to the Federal Secretaries of sixteen Ministries, Secretary, BoI AJ&K, Secretary Industries, Commerce &Labour Department, Gilgit Baltistan, CEOs Board of Investment & Trade of Punjab, KP and Balochistan.

However, no such information has been sought from Government of Sindh despite the fact that several renewable energy mining and coal power projects are in progress in Sindh with Chinese investment.

BoI, which directly comes under administrative control of Prime Minister Office, has asked all the Federal Secretaries and Provincial investment related organisations to share the information/data with contact details of focal persons of any of Chinese companies that have approached the Ministry/Department in the recent past with a definite plan of investment or that are at an advanced stage to invest in Pakistan.

Ministry of Planning, Development and Special Initiatives, which is incharge of CPEC Authority has asked Ministry of Energy (Power Division) to share three top “asks” related to power sector to be discussed at the apex level engagement with the Government of China.

The three top “asks” will be prepared like brief description, benefits for Pakistan, benefits for China, steps required on Pak side for implementation and steps required on China side for implementation.

Presently, Chinese companies which are already in the power sector, are facing, payment issues, non-cooperation from government organizations/ departments, tax related issues, extension in LoIs and most importantly, kickbacks to previous rulers and a mantra that Chinese projects are 25 per cent more expensive as compared to international standards. Chinese companies have clearly stated that Sinosure, Chinese loans insurance company, is reluctant to give guarantee on loans due to financial issues in Pakistan’s power sector.

The issue of insurance of Chinese loans by Sinosure is one of the major reason for the delays in project progress in the pipeline and under construction. Six projects worth $ 5 billion are facing delay due to non-approval from Sinosure.

Power Division, sources said, will propose to the Prime Minister to request Chinese leadership to spread the tenure of loans of power projects, so that Pakistan can repay loans in a longer period as Chinese are not ready to reduce tariffs on the grounds that if they do so in Pakistan, then they would also have to do in other countries. Energy projects of 5300 MW worth $ 13 billion have already been established under CPEC phase-I.

The sources said, payment of at least $ 35 million to the Chinese company is requested as compensation for the killed and injured Chinese workers at Dasu hydropower project. A technical committee headed by Joint Secretary, Water Resources Division is about to finalise the compensation package, which will be shared with the Chinese authorities. The company has not yet started work on the project on full strength but promised to be back second or third week of next month (February).

Prime Minister Office also sought a clear way forward from Ministry of Commerce, for enhancing the target of $ 2.3 billion to $ 10 billion in two years by segregating the products in the following two categories: (i) products that are already being exported and require expansion; and (ii) developmental products requiring interventions for export. For each category of the products MoC is to propose a list of interventions required along with potential value that will be added and the top exporters.

The issues related to development of Gwadar Port, hurdles in establishment of LNG terminal at Gwadar, provision of basic facilities will also be part of the discussions.

Prime Minister will invite Chinese companies in Special Economic Zones (SEZs) a couple of which are ready but others are facing several hurdles. Chinese companies have lodged complaints on undue delay in approvals at the government level.

The issue of ML-1 Railway’s project will also be on the agenda of discussions as there is wide difference in the feasibility study cost of the project of $ 9.2 billion whereas Pakistani officials say it should not be more than $ 6.8 billion.

The sources said, CPEC-II will focus on export growth (textile, IT etc.) and import substitution steel, agriculture productivity etc) sectors. Prime Minister, sources said, would urge Chinese companies to invest in agriculture sector of Pakistan as some companies have already shown interest in investment in agriculture sector in Balochistan and South Punjab.

Copyright Business Recorder, 2022


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