China to provide $1.5bn credit: Mega infrastructure projects
By Our Staff Reporter
ISLAMABAD, Oct 19: China on Tuesday agreed to provide $1.5 billion to Pakistan, including a new credit line of about $1 billion to undertake eight new mega infrastructure projects.
The two sides also decided at a meeting here to expand the Preferential Trade Agreement (PTA). Efforts are currently being made for the expansion of the list of items under the existing PTA. The two countries will also move towards signing a free-trade agreement.
The Chinese delegation was led by Assistant Minister of Commerce Chen Jian, while adviser to the prime minister on finance Dr Salman Shah led the Pakistani team.
The Pakistani side suggested some new projects for Chinese financial and technical assistance, including those relating to the phase-II of the Gwadar port, the Karachi Mass Transit project, technical assistance in developing genetically-modified cotton, the Neelum-Jhelum hydro-power project, private sector development with China, urban development, construction of motorways on built-operate and transfer (BOT) basis and opening up of banking sector in the two countries.
A fresh financing package amounting to one billion dollar from China would be needed for implementing these projects with Chinese assistance. China has also been asked to reconsider the capital requirement for Pakistani banks to open branches in China.
The Chinese minister said that Beijing was eager to assist Islamabad in its development projects. He suggested formation of study or expert groups to examine the feasibility and modalities of financing for all these projects.
The two sides also discussed in detail under-process projects, including utilization of the remaining $350 million preferential buyer's credit, issues relating to Chashma-II project, frigates project for Pakistan Navy, extension of preferential trade agreement and steps towards the free-trade agreement, Thar coal project, enhancement of cooperation in railways sector and accord on customs.
The Pakistani side stressed on the need to expedite work on the Thar coal project. The meeting was informed that discussions early this month between a Pakistani delegation led by Sindh Minister Irfanullah Marwat and the Shenhua group of China proved positive and led to reduction in the cost of the project.
The Chinese government was requested to take a quick decision on tariff. The Chinese side was also asked to expedite their approval of the feasibility of the Thar coal project so that a contract could be signed during Prime Minister Shaukat Aziz's expected visit to China.
It was agreed that out of $500 million preferential buyer's credit, $150 million would be set aside for the Chashma-II nuclear power project and the rest of unutilized amount $350 million would be allocated to a number of projects presented by different ministries and divisions.
The meeting was informed that all issues regarding the $500 million longer credit had been removed and an agreement could be signed as soon as the documentation process was completed.
The Pakistani side told the Chinese delegation that in March 2003 the then prime minister of Pakistan visited China and signed an MoU providing for implementation of additional railway projects.
The visiting delegation was informed about the projects for which the Chinese government assistance of foreign exchange financing in the form of soft-term state-to-state credit was needed, including procurement and manufacturing of 1,000 freight wagons, procurement and manufacturing of 150 passenger coaches, rehabilitation of existing electrification from Lahore to Khanewal and its extension up to Samasatta, dualising of track from Khanewal to Raiwind and from Shahdara to Lalamusa, electrification from Khanewal to Raiwind on the second line and doubling of track from Lodhran to Khanewal.
The Chinese side agreed to consider all these projects. It was also agreed that the 12th session of the Pakistan-China Joint Economic Committee would be held as soon as possible.
