ISLAMABAD, Sept 1: A delegation of South Korean conglomerate, Daewoo, is arriving on Monday to ask the government to repay $800 million which it had arranged from foreign banks for the construction of Islamabad-Lahore Motorway.
Pakistan, which was required under the contract to repay the foreign component of the loan in 10 years, is not repaying the instalments, and, in fact, has offered to pay in Pakistani currency.
It has opened an account with the State Bank of Pakistan in which rupees equivalent to the foreign currency instalment is placed but the Korean conglomerate has not yet agreed to draw the amount.
The Koreans had offered to accept the payment in rupee component provided it was allowed to invest in Pakistan on other projects. Pakistan, however, did not accept the condition.
Interestingly, the Korean company, has not gone to any court to ensure repayment and been trying to establish its business in Pakistan. The officials, who have worked with Daewoo and Bayinder of Turkey, are of the view that the Koreans are really businessmen as they are interested in maintaining good relationship for expanding their operations.
Pakistan had obtained $654 million from foreign banks, which were arranged by the Daewoo for the construction of 370 kilometres of Islamabad-Lahore section of the motorway. Due to non-payment by Pakistan, the amount has now been accumulated up to $790 million.
Pakistan, which signed the loan agreement in 1991, was provided a grace period of four years which was later extended from four years to six-and a-half year. The loan agreement between the Pakistan and Daewoo became effective from Feb 1992.
The grace period for the payment of foreign loan ended on Sept 2, 1998, but the government could not pay full instalment of $52 million. Under the agreement, Pakistan has to pay back $654 million in 10 years.
