TOKYO, Aug 10: Japan would provide $440 million to Pakistan during current year under a revived soft-term official development assistance plan, Prime Minister Shaukat Aziz told a press briefing on Wednesday after his meetings with his Japanese counterpart Junichiro Koizumi and ministers for finance and economy, trade and industry.

As the first step, the two governments also signed two $157 million agreements following the Japanese cabinet approved the package early in the morning.

Premier Shaukat Aziz said the agreements included a $36 million official development assistance for load dispatch and upgrade of the National Power Control Centre and $121 million for rehabilitation of lower Chenab canal.

The two loans carried an interest rate of 1.3 per cent and repayable in 30 years with a grace period of 10 years. Two more agreements, he said, were in the pipeline.

Pakistan, he said, had offered to set up a Japan City in Karachi and this would be given to one of the leading groups. However, the Japan External Trade Organization would work out all formalities in this regard and provide its expertise.

The prime minister said Pakistan had discussed increased market access, particularly for leather and textile exports, and preferential trade agreement between the two countries.

For this purpose, it had sought a level-playing field for the products.

Mr Shaukat said that at least two major companies showed keen interest in setting up of a mega refinery project in a coastal area for export and local use of petroleum products and government agencies would provide credit and insurance to the project.

He said a couple of companies also showed interest in hydel and thermal power projects. He said Pakistan had proposed a joint venture to set up a environment-friendly power project. The Japanese government would finance.

Terming his meeting with his counterpart as one of the best interactions, the prime minister said the dissolution of the Japanese parliament would make no difference or minimize its significance. Mr Aziz said he had met with the Japanese leader of the opposition and head of the Democratic Party of Japan, Katsuya Okada, and chairman of the executive committee of the Japanese Communist Party, Kazui Shii, and exchanged views on reforms in Pakistan and Japan, terrorism, Kashmir, relations with India and situation in Afghanistan.

He said the government of Japan and parliamentarians believed that the Kashmir dispute should be resolved through dialogue and appreciated Pakistan’s efforts against terrorism and economic reforms.

He said a number of companies like Mitsubishi, Marubeni, YKK-zips, Universal Steel Mills, and Sojitz etc., were planning to expand their existing business or make new investments in Pakistan.

Mr Aziz said he had directed PIA to revive four flights to Japan through Manila, if not possible through Beijing, and expressed the hope that tourists to Pakistan would increase to 14,000 or 15,000 this year.

He said the opposition members had asked about investigations into London bombings and he told them that all the suspects were British or African and American, and Pakistan had no link with these bombings.

Answering a question, the prime minister said Japan favoured solution of the Kashmir dispute through peaceful means and the Japanese premier was very interested in the peace process.

On terrorism issue, Mr Aziz told the Japanese leader that Pakistan was against terrorism in all its forms and manifestations. He also briefed him about Pakistan’s role and success in the fight against terror. He told the counterpart: ”Islam is a religion of peace, tolerance and brotherhood and has nothing to do with extremist tendencies.”

Referring to his visit to Japan, the prime minister said a number Japanese companies had showed interest in making large investments in areas like infrastructure development, engineering, power generation, hydel projects, agriculture, gas pipeline, LNG terminal in Karachi, automobile industry and textile.