The government has to-date disbursed Rs 7.64 billion and China Rs 1.14 billion ($11.24 million) on the proposed $46 billion China Pakistan Economic Corridor (CPEC). According to Economic Affairs Division (EAD), China has disbursed $561.4 million on development projects in Pakistan other than CPEC and disbursed $11.24 million on "Construction of Cross Boarder Optical Fiber Cable System" under CPEC.
Advisor (Development Budget) Ministry of Planning, Development and Reforms, Asif Sheikh told Business Recorder that $34.4 billion is projected to be Chinese investment in Pakistan's energy projects and no counterpart funds are required to be disbursed by the government of Pakistan. Chinese companies will invest in energy projects with the approval of federal government, he said, adding that the federal government would only monitor these projects.
Sources in Ministry of Planning, Development and Reforms told Business Recorder that a period of six months is required for disbursement of funds by Chinese companies on the CPEC projects. They said that many contracts were awarded to Chinese companies in January, 2016 under the CPEC for infrastructure projects and the process of documentation, including feasibility studies, by these Chinese companies with China Export Import Bank (China Exim Bank) are under way. Chinese companies will not commence work on the projects without the completion of necessary documentations, sources added. The sources said that the 6th meeting of Joint Cooperation Committee (JCC) is going to be held in June, 2016 to review the development projects of the CPEC.
The CPEC package comprises projects from road and rail infrastructure to energy works, free economic zones, textile and cotton zones, technology transfer, education scholarships and skill building opportunities for the Pakistani youth. China also made a commitment to providing billions of dollars of financial assistance to Diamer-Bhasha Dam.
According to the latest data available on the website of Ministry of Planning, the government has released only Rs 7.64 billion for CPEC projects. The Planning Commission released Rs 3 billion for Thakot to Havelian 120-km (land) (Phase-I) (CPEC), Rs 2.74 billion for Thakot to Havelian 120-km (construction) (Phase-I), Rs 1.5 billion for Necessary Facilities of Fresh Water Treatment, Water Supply and Distribution Gwadar, Rs 35 million for Construction of Cross-Border Optical Fiber Cable (OFC) System between China and Pakistan for International connectivity of Voice/Data Traffic (GB), Rs 50 million for Construction of Eastbay Expressway (CPEC), Rs 5 million for (i) PC-II for Feasibility Study to Connect Gwadar with Karachi, (ii) Feasibility Study from Gwadar to Basima and from Basima to Jacobabad via Khuzdar (CPEC), Rs 30 million for China Pakistan Economic Corridor (CPEC) Support Project at Ministry of Railways, Rs 5 million for Doubling/Improvement of Existing Track from Port Qasim to Bin Qasim Station (CPEC), Rs 270 million for Comprehensive Feasibility Study for Upgradation/Rehabilitation of Mainline 1 (ML-I) and New Dry Port at Havelian (Buldhair) District Haripur under China-Pak Economic Corridor (CPEC) and Rs 5 million for Doubling / Improvement of Existing Track from Port Qasim to Bin Qasim Station (CPEC).
China is investing $10.63 billion in transport and infrastructure through government to government agreements including $6.1 billion in construction of roads, $3.7 billion in rail network, and $793 million in Gwadar Port. The sources said that China Exim Bank would extend assistance to Pakistan at 1.6 percent interest rate for infrastructure projects under the CPEC.
Both the countries are following steps required for government-to-government agreements, which include: (i) Technical Preparation (feasibility study, PC-1); (ii) Government Framework Agreement; (iii) Selection of Chinese Companies through bidding process; (iv) Commercial Contract; (v) Agreement on Financing Arrangement; and (vi) Implementation of Construction by Companies.
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