‘CPEC funding is concessional’

December 30, 2018

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ISLAMABAD: Apropos a report that appeared in a section of media stating that Pakistan has to pay China $40 billion over $26.5bn CPEC investments in 20 years, the government has clarified that China has committed a total amount of $6bn concessional loans for five infrastructure projects related to CPEC.

These are low interest rate preferential loans with 20-year tenure and five years of grace period, says a press release issued by the PID. Out of these loans $4bn has been received so far.

In addition, China has approved $375 million grant projects which include Gwadar International Airport and Gwadar hospital. Similarly, the Eastbay Expressway project is being financed through an interest-free loan of $168m. The net effective rate of interest on CPEC infrastructure projects is around two per cent per annum.

These loans are scheduled to be repaid in 20 years starting from 2022. The total amount to be repaid is $7.457bn which includes principal amount of $6.035bn and interest of $1.422bn with an annualised payment of $350m.

Published in Dawn, December 30th, 2018